12/08/2020
To the investing public, please be aware.
The Commission En Banc has made permanent its order stopping CROWD1 Asia Pacific, Inc. from soliciting and accepting investments from the public under a scheme disguised as a digital marketing business.
In a resolution issued on July 2, the Commission En Banc denied the Motion to Lift Cease and Desist Order Ad Cautelam filed by CROWD1 for lack of merit and thereby declared the cease and desist order permanent.
“A careful review of the Motion to Lift will show that except for its general denials, CROWD1 failed to present any evidence in support of its claim that it is not engaged in the sale and/or offer for sale of securities in the form of investment contracts,” the resolution read.
The Commission En Banc issued a cease and desist order against CROWD1 last May 12 after the SEC-Enforcement and Investor Protection Department (EIPD) established by substantial evidence that CROWD1 has engaged in the sale and/or offer of securities, in the form of investment contract, without the requisite license required under Republic Act No. 8799, or The Securities Regulation Act.
CROWD1 has solicited and accepted investments from the public by offering what it describes as educational packages for a minimum of P6,000 and as much as P240,000.
To entice the public to invest, CROWD1 has promised member-investors five different bonuses: streamline bonus, binary pairing bonus, fear of loss bonus, matching bonus, and residual bonus from games and gambling apps.
CROWD1 has likewise touted a pairing incentive payable in euros to encourage member-investors to recruit new members.
In its Motion to Lift, CROWD1 argued its operations were limited to business processing, with affiliates marketing products and shares in the earnings of the organization. It also argued that the educational packages it was selling to the public was allowed since its objective is to educate the affiliates of the organization on possible wealth to be gained from marketing products and services.
The Commission En Banc, however, sustained the evidence presented by the EIPD showing CROWD1, its officers, agents and representatives were soliciting investments by enticing people to avail of its educational packages and recruit more investors to receive commissions.
The Commission En Banc noted: “As correctly pointed out by the EIPD, people avail of the so-called educational packages for the purpose of securing for themselves the guaranteed high yields promised by CROWD1. Thus, we agree with the EIPD that the marketing of CROWD1’s investment products is actually a public sale and/or offering of securities in the form of investment contracts. We also agree with the EIPD that CROWD1 acts as a conduit of funds. CROWD1’s allegation that it is not authorized to market nor receive payments from investors is belied by the receipts it issued to the investors which is under the name of a corporation which owns 40% of CROWD1.”
The Commission En Banc also found CROWD1’s investment taking-activities ultra vires or beyond the authority it was granted, in violation of Section 44 of Republic Act No. 11232, or the Revised Corporation Code of the Philippines.
READ THE RESOLUTION: https://www.sec.gov.ph/resolution-2020/sec-cdo-case-no-05-20-064in-the-matter-of-crowd1-asia-pacific-inc-sec-company-registration-no-cs201917023-enforcement-and-investor-protection-department-eipd-movant/
