SEC clamps down on Scentko World

MANILA, Philippines — The Securities and Exchange Commission (SEC) has ordered a perfume company to stop soliciting investments from the public.

The commission en banc issued a cease and desist order against Scentko World Corp., its parent firm Brendahl Cruz Holdings Inc. and its officers and sales people.

According to the SEC, the two companies sold securities in the form of investment contracts to the public without the necessary license.

Under its investment scheme, Scentkoworld entices investors to buy perfume and beauty products in exchange for cash sales rewards equivalent to 400 percent of the purchase price.

This means that a member can get a return of P20,000 for simply buying a package worth P5,000.

A member may receive the promised return in more or less than 30 days, without having to resell the products.

Aside from the cash sales rewards, an existing member may receive a referral fee equivalent to 10 percent of the amount invested by the new member.

The company’s “Buy and Earn Program” satisfies all the elements of an investment contract where there is investment of money in a common enterprise with expectation of profits derived primarily from the efforts of others, the SEC said.

“Based on the evidence presented, the selling or the offering for sale of securities whether directly or indirectly, in the form of investment contract, without the necessary license or permit will operate as a fraud on investors or is likely to cause grave or irreparable injury or prejudice to the investing public. Thus, they must be restrained,“ the SEC said.

Under Sec. 8 of Republic Act 8799 or the Securities Regulation Code (SRC), securities such as investment contracts shall not be sold or offered for sale or distribution without a registration statement duly filed and approved by the Commission.

Section 28 of the SRC adds that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.

“The Commission will institute appropriate administrative and criminal action against any person/s or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations,” the SEC said in the order.