THE Securities and Exchange Commission (SEC) warned the public against investing in Scentko World Corporation and its purported parent, Brendahl Cruz Holdings Inc., which have been promising a 400 percent return from their “buy and earn” program.
In an advisory posted on Wednesday, July 31, the Commission’s Enforcement and Investor Protection Department noted that Scentko and Brendhal Cruz Holdings have not secured a secondary license to solicit investments from the public.
“In view thereof, the public is hereby advised to exercise caution in dealing with any individuals, or group of persons soliciting investments, or recruiting investors for and on behalf of Scentko and Brendahl Cruz Holdings,” read the advisory.
“The public is further advised not to invest or stop investing in any investment scheme being offered by Scentko and Brendahl Cruz Holdings,” it added.
Under its investment scheme, Scentko entices the public to buy perfume and beauty products in exchange for “cash sales rewards” equivalent to 400 percent of the purchase price. For instance, a member is promised a return of P20,000 for simply buying a package worth P5,000.
A member may receive the promised return in about 30 days without having to resell the products, depending on how soon Scentko can recruit new members. Accordingly, the company encourages its members to recruit others as well.
Aside from the cash sales rewards, Scentko promises a referral fee equivalent to 10 percent of the amount invested by the new member.
Scentko and Brendahl Cruz Holdings are registered as corporations. However, the issuance of a certificate of incorporation only grants an entity a juridical personality and does not constitute an authority to engage in activities requiring a secondary license from the SEC, such as selling and offering securities.
Under Section 8 of Republic Act 8799, or the Securities Regulation Code, securities such as investment contracts shall not be sold, or offered for sale or distribution without a registration statement duly filed and approved by the Commission.
Section 28 further states that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.
In this light, those acting as salesman, broker, or agent of Scentko and Brendahl Cruz Holdings may be prosecuted and held criminally liable.
They may face a maximum fine of P5 million, or imprisonment of 21 years, or both, pursuant to Section 73 of the Securities Regulation Code. Scentko and Brendahl Cruz Holdings add to at least 42 investment schemes earlier flagged by the SEC this year.
The public is encouraged to report any information on their operations by calling (02) 818-6047. (PR)