SEC revokes registration of suspected 'boiler room' operator First Equis Inc.

MANILA, Philippines - The Securities and Exchange Commission has revoked the certificate of registration of  First Equis Inc. (FEI), a company suspected to be engaged in boiler-room operations, for employing “fictitious, fabricated and nonexistent addresses in its articles of  ncorporation.” In its order, the SEC said FEI used non-existent addresses based on an  investigation conducted by the agency’s Compliance and Enforcement Department (CED).

The probe was spurred by a letter from the Financial Services Agency Government of Japan (FSA), informing the SEC of a suspected boiler room named First Equis Ltd. (FEL), which claims to be located in Tokyo.

According to the FSA, FEL appeared  to have a representative office in the Philippines headed by Louis Morgante whose address indicated was at Island Plaza Salcedo.

A check with SEC records, however, showed that FEI was the one duly registered with the commission on June 20, 2006 with principal office at the lower ground floor of Alfaro’s Place, L.P. Leviste Street, Salcedo Village in Makati.

“Upon surveillance of the CED investigators, it was discovered that FEI never held office at its given address as verified by the building administrator of Alfaro’s Place. Also, the indicated address of Louis Morgante turned out to be a rented mailbox. Likewise, upon thorough investigation, it was established that the respective addresses used by the  incorporators in FEI’s articles of incorporation were either fictitious or fabricated,” the  SEC said.

The CED said the notices issued to FEI, requiring appearance of the company’s  incorporators/directors, through registered mail, were returned unopened and stamped  with “return to sender” from the postmaster.

Records of the SEC also showed that FEI failed to submit its annual general information  sheet and financial statements since its incorporation.

“Evidently, there is an apparent intention to defraud the commission and the general public. Had the commission known of such falsities, the registration of FEI would have been denied,” the SEC said.

“As part of the requirements for incorporation and registration with the commission, the  filing of its articles of incorporation is necessary as it defines the charter of the  corporation and contractual relationships between the state and the corporation, the stockholders and the state and between the corporation and stockholders.”

Boiler rooms are described as high-pressure telephone sales operations, manned by a  well-trained sales force that works the phones to find clients and sell nonexistent

securities to unsuspecting individuals. The victims are usually foreign investors. Since 2001, the SEC has issued cease and desist orders against suspected boiler room  operators Goldberg & Partners Inc., United Capital Mgt. Inc., Oxford Int’l. Mgt. Inc., Wells  Chadwick Inc., Barclays Group Inc. & New World Financial Group Ltd., Sherman Brothers Mgt. Ltd. Inc., Bradford Kempner Mgt. Services Inc., Muller & Sons Securities Mgt. Inc., Dukes & Co. Securities Corp., Knowie & Sachs Inc., Saxon & Swift Inc.,  Newport Pacific Securities & Mgt.,  Worldwide Investors Inc., Asia World Online Inc. and Bradshaw Global Asset Mgt.