Last Wednesday I attended the ACCRALAW Cebu Business Forum at the City Sports Club upon the invitation of my former professor in the USC School of Law and Governance, ACCRALAW senior partner Atty. Jefferson M. Marquez.
There were two reasons I was excited about the invitation. One, it was my chance to meet again after 11 years my exemplary Labor Law professor, Atty. Marquez. Another reason to be there, of course, is the topic of the forum, “Setting Up, Doing Business and Folding Up Under the Revised Corporation Code,” with no less than ACCRALAW of-counsel and former chairwoman of the Securities and Exchange Commission (SEC), Atty. Teresita J. Herbosa, as speaker.
The ACCRALAW business forum is a yearly project of the country’s top-tier law firm which aims to update its clients and friends on the significant legal developments affecting business and industry.
Atty. Herbosa gave her audience the highlights of the Revised Corporation Code (RCC) which took effect on February 21 this year. Herbosa championed the law’s passage both in her capacity as chairwoman of the SEC until March 2018 and as resource person during legislative hearings leading to the enactment of the law.
The RCC basically simplifies the requirements in setting up and registering a corporation in the country. It also keeps the law on business operation up-to-date with the latest technology available in facilitating intra-corporate operations and in dealing with government regulations.
Of particular interest to the general public, however, is the topic on investment scams or securities fraud which Herbosa also extensively touched on. Herbosa said that one of the mandates of the SEC is to protect investors from fraudulent investment schemes. Simply put, these are investments that have no grounds whatsoever of possible or promised returns.
Preventing investment scams is a relentless effort because of the constant need to educate the general public about how investments work and the nature of financial markets. Herbosa, in fact, described the investment scammer as “an enabler of dreams”. This explains why the human nature to dream big makes many people vulnerable to scammers who would exploit that psychological attachment for a quick and easy chance for a big payout.
Adding to the problem in fighting investment scams is the difficulty in prosecuting the scammers. Prosecution evidence and testimonies from victims are hard to come by, and mostly because the perpetrators threaten not to give the victims their money back if they testify against them.
In a way, for me, the victims too are to blame. Because really their only motivation in reporting the scam to the authorities is to get their money back, and not really to clamp down on the scammers. Some face threats of violence from the scammers. Then there are also cases where the victims group themselves and spin off as another investment scam in attempt to recoup their previous losses.
Herbosa reminded her audience to also check on the activities or the nature of the job of their family members or loved ones who work as employees assigned to read a script in “cold calling” potential customers into buying securities or taking an investment opportunity.
In this situation, the 2014 case of SEC vs. Santos (G.R. No. 195542) serves as an always-timely warning. In the said case, the Supreme Court ruled that even mere employees can be dragged to court as principal suspects if preliminary findings by the prosecutor show that they participated in recruiting and enticing investors in a fraudulent investment scheme.