SEC stops firm from selling golf club membership

The Securities and Exchange Commission (SEC) has issued an order stopping sports facility operator YNC Corp. from further offering non-proprietary club membership certificates of Makati Golf Club (MGC) to the public.

At the same time, the SEC directed YNC to explain why the cease-and-desist order (CDO) should not be made permanent and why it should not be sanctioned for selling membership certificates of MGC without prior registration from the commission.

SEC is looking at a fine of P10,000 per transaction or one-tenth of one percent of the aggregate issuance whichever is higher pursuant to the revised scale of fines.

The investigation conducted by the SEC’s Compliance and Enforcement Department showed that MGC is not registered with the SEC but with the Department of Trade and Industry. YNC was also found to have indiscriminately sold securities in the form of club membership of MGC to clients.

Under Section 3 of the Securities Regulation Code, securities refer to shares, participation or interest in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character.

"The continued offering and sale of securities by YNC without the requisite registration and license, will likely cause or irreparable injury and prejudice to the investing public. Hence, this must be restrained to protect the investing public," SEC general counsel Vernette G. Umali-Paco said.

Covered by the CDO are YNC’s officers, directors, partners, representatives and all persons acting for in its behalf.

Umali-Paco said YNC may file a request for the lifting of the CDO within a non-extendible period of five calendar days from receipt of order, stating therein whether the corporation is willing to enter into a settlement offer under Section 55 of the SRC and would opt for summary procedure.