SEC revokes Wellcons’ corporate registration

MANILA, Philippines — The Securities and Exchange Commission (SEC) has revoked the corporate registration of Wellcons Unlimited Systems Inc. because of illegal solicitation of investments which promise double-your-money returns.

In an order dated July 5, the corporate regulator’s Enforcement and Investor Protection Department (EIPD) said Wellcons does not have the necessary secondary license to solicit investments.

In doing so, Wellcons committed an ultra vires act under Section 44 of Republic Act   11232, otherwise known as the Revised Corporation Code of the Philippines, the SEC said.

Wellcons has been offering investment packages worth P2,500 to P13,890 under a so-called Binary System, with guaranteed returns of up to P9,000 to P32,000 per day.

Members who availed  of investment packages under the Binary System can further earn through Wellcon’s Pangkabuhayan Program, where they can supposedly double their money within six months based on investment packages worth P1,500 to P5,000, according to the SEC’s investigation.

In addition, Wellcons promised leadership bonuses and referral fees, among others.

“The company’s activities also constituted serious misrepresentation as to what it can do, to the great prejudice of or damage to the general public, a ground for the revocation of a corporation’s certificate of registration under Presidential Decree 902-A,” according to the order.

As early as Feb. 2, the SEC has warned the public against investing in Wellcons. It likewise issued a cease and desist order against the company last month.

Wellcons’ investment scheme involves securities, particularly an investment contract, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the EIPD.

However, the SEC said that as a form of security, investment contracts must be registered with the corporate regulator before issuers can sell these products, pursuant to Section 8 of Republic Act   8799, or the Securities Regulation Code (SRC).

“Considering that nowhere is it stated in the primary purpose clause of Wellcons in its articles of incorporation that it is authorized to engage in the selling or offering for sale of securities to the public, coupled with the fact that it does not have the necessary permit to offer and sell securities, the activities of Wellcons of selling or offering for sale securities in the form investment contracts is considered an ultra vires act and therefore constitute serious misrepresentation,” the order read.

The EIPD further noted that Wellcons’ double-your-money scheme through its Pangkabuhayan Program resembles a Ponzi scheme, where the profits or payouts taken from incoming investors are paid to existing or earlier investors.