SEC Urges Public to Avoid Investing in Two Companies After Licenses are Revoked

The certificates of incorporation of two firms — namely, ScentKoWorld Corp. and Brendahl Cruz Holdings, Inc. — have been nullified by the Securities and Exchange Commission (SEC) after it was found that they were involved in the illegal selling of securities to the public. Both companies were reported to be offering a 400% return for investing in their “buy and earn” programs.

“Under its investment scheme, ScentKoWorld entices the public to buy perfume and beauty products in exchange for ‘cash sales rewards’ equivalent to 400% of the purchase price. Hence, their member was promised a return of P20,000 for simply buying a package worth P5,000,” explained the SEC.

“Also, their members may receive the promised return in about 30 days, without having to resell the products, depending on how soon ScentKoWorld can recruit new members,” added the regulator. “Accordingly, the company encourages its members to recruit others as well. And lastly, ScentKoWorld promises a referral fee equivalent to 10% of the amount invested by the new member.”

This type of scheme is similar to an investment contract, which should first be registered with the commission before companies are allowed to distribute it to the public. Both ScentKoWorld and Brendahl Cruz Holdings were not just unregistered but also unlicensed market professionals, according to the SEC. Furthermore, a cease-and-desist order was already issued to entities affiliated with Brendahl Cruz — which includes the two firms — back in 2019. Despite this, “the said corporations did not pay attention thereto, and in fact, continued their investment-taking activities.”

“The department was able to prove that the entities involved therein were engaged in illegal activities of soliciting investments from the public without the requisite secondary license, and worse, the investment-taking activities are within the context of a Ponzi Scheme as there was nothing that would indicate that there is a lawful business activity from which to generate the supposed income to be distributed to their member-investors,” it elaborated.

ScentKoWorld and Brendahl Cruz Holdings registered with the commission in 2018 and 2019, respectively. However, the stated primary purposes of the two firms are not aligned with the investment scheme they are offering. The SEC has since cautioned the public against investing in the two companies.

“Those who act as salesmen, brokers, dealers or agents in selling or convincing people to invest in [said entities] including soliciting investments or recruiting investors through the internet may be held criminally liable,” added the SEC. Individuals who will be found in violation may be fined a maximum of ₱5 million or imprisoned for up to 21 years.

Source: BusinessWorld