The Securities and Exchange Commission (SEC) issued cease-and-desist orders against private equity firm MFT Group of Companies Inc. and Infinity8Networks Digital Services OPC for alleged illegal solicitation of investments from the public.
The SEC, in separate orders dated January 16, directed MFT Group, which later transitioned to Foundry Ventures, and Infinity8Networks to “immediately stop engaging in the unlawful solicitation, offer and/or sale of securities in the form of investment contracts without the necessary license”.
It also ordered the companies to stop transacting any business involving funds in its depository banks, and from transferring, disposing or conveying any related assets to ensure the preservation of the assets of its investors.
The order covers the companies’ directors and officers, representatives, salesmen, solicitors, agents, uplines, enablers and influencers and any and all persons claiming and acting for, and in their behalf
The SEC said that based on its investigation, MFT Group was offering and selling unregistered securities in the form of investment contracts to the public in the guise of borrower-lender agreements in the form of memorandums of agreement that would later be transformed into promissory notes.
The MFT Group reportedly organized public events where it solicited investments supposedly for start-up companies in exchange for a guaranteed return ranging from 12 percent to 18 percent per annum.
It used the term, “interest income,” to give semblance of legitimacy to the transactions, which the group packaged as loans.
The SEC said that while MFT Group and Foundry Ventures are registered with the SEC, they had not secured the required secondary license to sell investment securities to the public.
The SEC said it found that Infinity8Networks was offering investment plans ranging from P500 to P5 million for a guaranteed return of 30 percent in five days to 500 percent in 40 days.
It also promised investors an additional income of 5 percent for their referrals.
The SEC said Infinity8Networks’ scheme allegedly involved the sale and/or offer of securities in the form of investment contracts, where a person makes an investment of money, in a common enterprise, with the expectation of profits, to be derived solely from the efforts of others.
The Securities Regulation Code (SRC) provides that securities should not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.