The Securities and Exchange Commission has ordered the revocation of the primary license or incorporation of Boracay Capital Holdings Inc. for selling investment contracts without benefit of registration.
Boracay Capital, the SEC said, uses its social media platform to seek out investors with promises of high-yield dividend payments, passive income and supposedly diversified investment products.
“Such invitation to offer or sell securities to the public without the corresponding registration with the commission is illegal and punishable by law pursuant to Section 8 in relation to Section 73 of the SRC (Securities Regulation Code),” the agency said.
Incorporators and company directors Christine Grace Tolentino and Antonio Echavez both denied the SEC allegations, claiming their website has not been operational.
The duo said the findings were products of the mere opinion of the EIPD based on its interpretation of the social media and website posts.
“Respondents are reminded that as the regulator, the EIPD, as the enforcement arm of the commission, understands the provisions of the laws it is mandated to implement and to determine what constitute violations thereof,” the SEC said.
According to the SEC, the claim that the website is not yet operational is a lame defense as the Enforcement and Investor Protection Department visited the website and proved that the platform is accessible to the public.
“In fact, it was noted that it was only after the issuance of the show cause order when the website turned into ‘under construction’ status,” the SEC said.
The SEC said the company acknowledged that it is an investment management company.
This was “iclear proof that it is indeed engaged in investment-solicitation activities where the interested investors are enticed to deal and transact with the subject company,” the SEC said.
“Investors who were made to believe that the subject entity is authorized to engage in investment-solicitation activities were subsequently offered to make an initial deposit of P5 million, allegedly to be invested in stocks, investment funds or bonds,” the SEC said.
Tolentino and Echavez, as incorporators and officers of Boracay Capital were also found administratively liable for fraudulent acts and were banned from acting as directors of a corporation for five years.
