Investing basics, be cautious: Research, verify investments

CEBU, Philippines - When investing, if it sounds too good to be true, it probably is. That’s why there are still people who fall prey to investment frauds.

Despite the efforts of regulators to educate the public, Filipinos still tend to engage in bogus investment schemes that promise them big profits.

The Securities and Exchange Commission has advised the public to be very cautious with financial investments that guarantee high returns in a short period of time.

SEC Cebu Director Lindeza Gavino has this to say: “If the return is too good to be true, I think the person or the potential investor should look more closely into what he’s putting his money into.”

Gavino, however, claimed it is impossible for the government to prevent these scams for as long as there are people who, despite knowing what they’re getting into, still take into no-risk-but-high-return ventures out of greediness.

But government regulators must improve its scam-busting system to stop the scams of unregistered investment companies. They must stop bogus schemes before they happen to maintain a safe financial environment.

“Although we understand that our dream is to give better life to our families but fraudsters take advantage of these goals,” the director told The FREEMAN in an interview.

Ponzi, skimming and pyramiding are the most common financial scams. The multi-billion peso Aman Futures investment scam is one the major investment scams in the country for the past years. The scam broke out in 2012, losing about P12 billion from around 8,000 investors from Visayas and Mindanao victimized by Aman Futures.

‘Know the firm well’

Before investing in a certain company, Gavino advised the public to know about firm very well by looking for its registration which can be checked on SEC’s website.

“When we receive complaints, what we will initially do is check if the entity is registered with SEC or not. Probably, if it is not registered here, it might be registered with DTI,” she said.

Aside from its registration, potential investors should also verify if the company has a secondary license to sell securities or investment contracts.

The official said: “The security should also be registered with SEC because that requires a secondary license; meaning, your registration with SEC does not automatically grant you the license to sell securities.” A corporation can also be registered as an ordinary firm.

Investors must also confirm the registration of investment products and contracts and broker-dealers that trade securities, the corporate watchdog said.

The SEC official further advised: “Make sure you understand the activities that they tell you will give you these much returns. Don’t be blinded by the potential income you will get. Don’t be overpowered by the sales pitch. That’s how scammers work.”

She added rural people are usually the target of fraudsters because of their little knowledge on how to detect legal and fake investments.

SEC Cebu conducts information drive every month in its extension office on non-stock and stock corporations.

Aside from investment scams, the seminar also teaches the investing public on the reportorial requirements firms should have such as general information sheet, financial statement received by the revenue agency, affidavit of non-operation, stock and transfer book (for stock company) and membership book (for non-stock firm). — (FREEMAN)