Wellcons CDO permanent – SEC

MANILA, Philippines — The Securities and Exchange Commission (SEC) has ordered  the permanent closure of Wellcons Unlimited Systems Inc., an entity found to be offering investment packages to the public without the necessary license.

In a resolution dated Aug. 11, the commission en banc denied the motion of Wellcons to lift the cease and desist order  for soliciting investments from the public in the guise of health products.

Wellcons offered investment packages worth P2,500 to P13,890 under a so-called binary system, with guaranteed returns of P9,000 to P32,000 per day.

It said investors could further earn from Wellcon’s Pangkabuhayan Program, where they could supposedly double their money within six months by availing of investment packages worth P1,500 to P5,000.

Wellcons also promised leadership bonuses and referral fees, among others.

According to the SEC Enforcement and Investor Protection Department (EIPD), Wellcons’ investment scheme involved 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.

Section 8 of Republic Act 8799 or the Securities Regulation Code provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.

While Wellcons was a duly registered corporation with the SEC, it had never secured a secondary license to operate as a broker/dealer of securities, nor is it a registered issuer of any securities.

In its motion, Wellcons argued, among others, that its business consisted mainly of the sale of health products, which were distributed to the consuming public through various packages, with different subscription amounts.

“The complaints which the EIPD submitted in evidence show that member-investors actually purchased investment packages with the guaranteed returns, rewards, and monthly earnings as their main consideration for parting with their hard-earned money,” the SEC said.

The commission en banc cited the sales invoice that Wellcons itself submitted as evidence.

It observed that there was nothing in the sales invoice that would  show that the payor purchased Wellcons products, and that the sales invoice rather confirmed the sale or offer of investment packages by Wellcons.

“Under this scheme, member-investors of Wellcons clearly had a stake in the operations of the company in the sense that they profited and/or stood to profit in the continued sale of the investment packages,” it said.

An advisory against Wellcons was issued by the SEC as early as Feb. 2 in order to warn the public against investing in the group and similar entities.

The SEC EIPD proceeded with the revocation of the certificate of incorporation of Wellcons through an order dated July 5, for illegally soliciting investments from the public through a “double-your-money” scheme.

In soliciting investments from the public without the necessary license, Wellcons committed an ultra vires act under Section 44 of the  Revised Corporation Code of the Philippines, according to the EIPD.

The EIDP said the company’s activities also constituted serious misrepresentation to the great prejudice of or damage to the general public, a ground for the revocation of a corporation’s certificate of registration.