SEC issues halt order against Trading Point, XM

The Securities and Exchange Commission (SEC) has issued a cease and desist order (CDO) against Trading Point Holdings Limited, operating under the name and style of XM, XM Global Limited and XM Philippines, for its unauthorized solicitation of investments from the public.

In an order promulgated on November 7, the SEC directed the XM Group to immediately stop engaging in the unlawful offering and/or selling of securities without the necessary license from the Commission.

The company, including its officers, promoters, representatives, agents, influencers, subsidiaries, and any and all persons claiming and/or acting for and on their behalf, to cease their internet presence relating to the transactions and investment scheme covered by the CDO.

Among the group’s endorsers are Filipino boxing icon and former senator Emmanuel D. Pacquiao, Sr., and forex coach and trader Jonathan Lou Reyes.

The SEC likewise prohibited the group from transacting any and all business involving funds in its depositary banks, and from transferring, disposing, or conveying its assets, real or personal properties, including bank deposits, to prevent grave damage and prejudice to all concerned and ensure preservation of assets for the benefit of investors.

The issuance of the order stemmed from the investigation by the SEC Enforcement and Investor Protection Department which found the XM Group to be selling or offering derivatives, foreign exchange shares, and cryptocurrencies, among others.

XM operates under its parent company, Trading Point, an international financial services company that publicly offers, sells and provides brokerage services and products, through its website xm.com and the XM App. Locally, it promotes and facilitates the offering and sale of the products and services in the country using its XM Philippines Facebook and YouTube accounts.

Under its scheme, XM requires investors to create an account on its platform to access its offered plans by depositing the minimum amount depending on their chosen plan. Subsequently, investors may start purchasing and trading securities through the different XM platforms, which emphasize potential returns to entice users to invest their money.

XM also grants bonuses and cash rewards for successful referrals under the Friend Referral Program to ensure continuous flow of investments and investors.

Section 8.1 of the Republic Act No. 8799, or the Securities Regulation Code requires securities to be registered with the Commission before they can be offered/sold in the country, while Section 28 prohibits a person from engaging in the business of buying and selling of securities in the Philippines unless duly registered as a broker or dealer with the SEC.

The XM Group is not registered as a corporation or partnership with the SEC. Accordingly, they cannot secure a secondary license that would allow it to offer securities to the public.

“The fact that XM has tapped and made available the local banks and e wallets as its payment partners clearly shows that investors in the Philippines are primarily its target market,” the order read.

“Considering that XM was shown, by substantial evidence, to be offering/selling unregistered securities in the Philippines without the requisite license in violation of Sections 8 and 28 of the SRC, the issuance of a CDO is therefore warranted for the protection of the investing public, as it operates as a fraud on investors,” it added.
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As early as March 2024, the SEC has issued an advisory to warn the public against investing in unregistered online investment platforms, such as XM.