SEC cancels corporate registration of Seek Explore

The Securities and Exchange Commission (SEC) has revoked the certificate of incorporation of Seek Explore Sports Association, Inc. for offering securities to the public without the necessary approvals from the Commission.

In an order dated December 12, the SEC Enforcement and Investor Protection Department (EIPD) cancelled the corporate registration of Seek Explore for violating Section 44 the Republic Act No. 11232, or the Revised Corporation Code of the Philippines (RCC), in relation to Sections 8.1, 26 and 28.1 of Republic Act No. 8799, or the Securities Regulation Code (SRC).

Seek Explore was likewise directed to pay an administrative fine amounting to P1 million.

Section 44 of the RCC prohibits corporations from possessing or exercising corporate powers other than those conferred by law or by its articles of incorporation (AOI), and except as necessary or incidental to the exercise of its powers.

Meanwhile, Section 8.1 of the SRC prohibits the selling, offering or distribution of securities without a registration statement duly filed with and approved by the SEC, while Section 28.1 requires all persons engaged in the business of buying or selling securities to be registered with the Commission.

Section 26 of the same law makes it unlawful for any person, directly or indirectly, to engage in fraudulent transactions in connection with the purchase or sale of any securities.

Seek Explore was a company primarily engaged in the implementation of synergistic activities to improve the health, education and productivity of communities, and to facilitate and receive financial or in-kind contributions for association development, promote livelihood programs, and conduct outreach programs, according to its AOI.

Upon investigation, however, the EIPD found Seek Explore to have offered unregistered securities worth P500 up to P140,000, with earnings ranging from P30 after three days, and up to P1.79 million after 150 days, depending on the chosen plan. Investors may also earn a commission of up to 17 percent.

The EIPD noted that Seek Explore’s activities resemble a Ponzi scheme, wherein the payouts to early investors are derived from the capital contributed by later investors.

“The act of [Seek Explore] through its affiliates in allowing certain persons acting as their agents or representatives to make public presentations of their investment scheme, inviting the public to invest in the companies through social media, renders them liable for the unauthorized public offering of securities and the misrepresentation committed in connection with such public offering,” the order read.
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“The offering and selling of securities in the form of investment contracts using the ‘Ponzi Scheme’ which is fraudulent and unsustainable, is not a registrable security. The Commission will not issue a License to Sell Securities to the Public to persons or entities that are engaged in this business or scheme,” it added.