Despite government efforts to shut them down, there are now even more investment scams sprouting to victimize the unwitting public seeking to find more active ways to grow their hard-earned cash other than park these funds in the bank.

 The Securities and Exchange Commission (SEC) has been on the forefront of these efforts to go after scammers and stop their illegal operations while, at the same time, ensuring that the public has an array of legitimate investments to choose from.

Securities and Exchange Commission (SEC) Davao

 SEC records show that investment scams have mushroomed this year and most are being perpetuated online as anti-COVID-19 quarantine measures have forced people to stay at home and limited the ability to agents to seek out potential victims in public places.

This year, the SEC said it has revoked six corporate registrations for serious misrepresentation, issued 9 cease and desist orders, and 123 advisories or warnings against potential scams.

In contrast, the SEC issued just 65 advisories last year or about half the number year-to-date. It also issued 18 cease and desist orders in 2019.

“Community protocols were circumvented by concentrating recruitment and collection of investments online. Facebook is a popular social media tool used by the scammers aside from Twitter and Viber,” said the SEC. 

It noted that, “Those who disguise their schemes with the use of products such as soaps and herbal drinks make promises that the products will be delivered once things are back to normal. The investor-victims send their monies to the scammers through various methods, such as bank transfers, Palawan Express and Paymaya.”

The SEC pointed out that, “fraudsters have seen the COVID-19 pandemic as an opportunity to prey on our fellow Filipinos. Some would appeal to the good nature of our people during these difficult times by claiming that a small percentage of their investments or profits from their investments will be donated to the COVID-19 effort. Others would take advantage of people looking for alternative sources of income while operations and work in most industries are suspended or limited.”

Since the scammers have gone digital, the SEC said their operations are no longer limited to certain cities or provinces as the internet has allowed them to spread further as they are no longer bound by borders.

“Most, if not all of them, have been promoting their schemes and recruiting people on social media.
The internet, coupled with the accessibility of money transfer and payment services, has allowed investment scammers to target more people across and even outside the country,” said the SEC. 

The Commission said scammers are not choosy, “Anyone with money to invest is a target. We have received inquiries, reports and complaints from overseas Filipino workers, retirees, and even professionals. 
Even those without money have become victims of these scams.”

“In their desire to earn quick money, some investors obtain loans from relatives, friends and other sources, and invest the money loaned in these scams. Some are allowed to join without an initial investment as long as they are able to recruit other investors into the scheme,” said the SEC.

Even senior citizens and new graduates have also been targeted while the infamous
Kapa-Community Ministry International had targeted public school teachers at some point. 

The SEC lists some tell-tale signs of scams:

1.          Promise high or ridiculously high rates of return

2.          Guarantee payment of returns at no risk

3.           No registration with the SEC

4.          Difficult to understand – the investor is mostly in the dark how their 
investments are supposed to


5.           No office — transactions are online and through social media platforms 

6.          Meetings are done in public places such as coffee shops and fast food 
restaurants instead of an office 

7.          Claims that the investment is a once in a lifetime opportunity and investor 
should invest right away 

8.          Investment scams always come with the promise of quick and easy money. If it’s too good to be true, it must be. 

9.          Investment scams also give emphasis on the recruitment of more members.

10.         The lack of the necessary licenses should easily give them away.

Scams come in many forms but are generally categorized as Ponzi schemes, pyramiding, and boiler room operations.

In a Ponzi scheme, earlier investors are paid exceptional returns from the deposits of new investors. The scheme, however, is doomed to fail, as the number of new investors would inevitably decline. When that happens, there will be not enough contributions to sustain the payouts of investors. 

In pyramiding, participants are rewarded for inviting other people to join the program or recruiting downlines. You will pay a certain amount then receive commissions from the amount contributed by your recruits and their downlines. 

Scammers would layer or associate their schemes with privileges or products, which have no real world value, are ridiculously overpriced, or do not appeal to investors without the promise of getting commissions from recruitment.

Boiler room operations, meanwhile, use high-pressure sales tactics to sell illegitimate or inexistent investment products. In some cases, scammers call or approach an investor with what is supposed to be an inside information that a stock’s price will rise in a couple of weeks. The scammers then convince the investor to buy the stock right away. It would turn out that the investor’s money was not actually used to buy the stock. 

Recently, there has been a spate of boiler room operators advertising online with the use of the photos and names of prominent businessmen and finance officials to entice investors to bet on crypto-currencies. 

These ads have claimed that billionaires including Manuel B. Villar Jr., Enrique K. Razon Jr., Manuel V. Pangilinan, and even Finance Secretary Carlos G. Dominguez (who was a prominent businessman before joining the government), have secretly made a lot of money by investing in these instruments.

Both the SEC and the Department of Finance have issuedwarnings “on the spread of false information fraudulently using the name of Finance Secretary Carlos G. Dominguez to promote a fake cryptocurrency auto-trading platform called Bitcoin Revolution.”

Aside from Bitcoin Revolution, the SEC has also flagged two other entities using the purported interview of Vic Sotto with Sec. Dominguez – Immediate Edge and Bitcoin Digital.

“These entities are apparently international cryptocurrency Ponzi scams characterized by promises of ridiculous rates of return (300 percent to 700 percent return a day!), use of fake celebrity endorsements (aside from Sec. Dominguez, Bill Gates, and Richard Branson, among others), and use of autobots/artificial intelligence which allegedly picks investment opportunities on behalf of investors with 99 percent success rate,” noted the SEC. 

The SEC advises the public who are given an investment offer to always look for order of registration covering the investment contracts or securities being offered, the certificate of permit to offer securities for sale under the name of the company, as well as the certificate of registration of the salesperson or individual inviting you to invest or join the group. 

“Please note that a certificate of incorporation from the SEC does not authorize a company to take investments from the public,” said the SEC which also advises the public to check or verify the legitimacy of the company with the SEC which issues advisories against unauthorized and suspicious investment schemes from time to time. 

“In addition, ask for a prospectus, offering circular, financial statement, or other similar documents that would help you assess the condition and potential of the company. Read the small print carefully, particularly on refund and other rights afforded to you as an investor, and make sure you understand the terms thoroughly before giving any commitment,” said the SEC. 

It stressed that, “When in doubt, just keep your money.”

While scams are everywhere, there are also various legitimate means where the public can invest their hard-earned money and make reasonable returns such as the purchase of fixed-interest bearings instruments like Treasury bills, corporate bonds and commercial papers.

With some rish but potential for higher returns are stock investments where investors can earn cash or stock dividends over the long term as well as make money from the appreciation of stock prices.

“The stock market isone of the many potential platforms to invest your money on. Buying shares of stocks of a company means being a part owner of it. Hence, it allows every investor to grow their hard-earned money through capital gains and dividends (stock or cash). It is also a way to diversify your investment portfolio,” said Philstocks Financial Online Sales and Engagement Manager Ryan Rey Panis.

He noted that, “The popularity of and presence of online stock investing also allows every Filipino, even abroad, to invest because it is easy to register and open an account, can start with a minimal initial investment and can trade (buy and shares of stock) even when the market is closed.”

To start investing in the stock market, the Philippine Stock Exchange tells new investors to first choose a stockbroker.

“The PSE has a complete list of information about all its trading participants who are authorized and qualified to trade securities for you. This list is also available on the PSE’s website and the telephone directory’s Government and Business listings yellow pages under the category of stock and bond brokers,” the bourse said.

It added that, “Aside from representing you in the stock market, a stockbroker can also offer you services such as access to market reports/studies, on-time delivery of important documents, and advise on your investments. It is then important that you trust your stockbroker and that you are satisfied with its services.”

New investors will be required to open an account with their chosen broker and fill out a Customer Account Information Form and to submit identification papers for verification. Some may require new investors to make a deposit for their first transaction.

“The stockbroker will then assign a trader or agent to assist you in either buying or selling any listed security. There are also stockbrokers who have an online trading facility that allows you to post orders by yourself, but sufficient understanding of how the stock market works is key. If you choose to be assisted by a trader or agent, you can discuss with him/her what stocks you want to buy or sell,” said the PSE.

Source: Manila Bulletin (