The Securities and Exchange Commission (SEC) on Friday affirmed its decision to issue a permanent cease-and-desist order (CDO) against HASMADAI Foundation Inc. and its affiliated organizations, including Humanitarian and Spiritual Mission Apostolates of Davao and Asia Inc. and Humanitarian Institute of Technology Corp. The SEC en banc ruling effectively denies HASMADAI’s motion to lift the CDO, citing unauthorized investment solicitation.
In its May 21, 2024 order, the SEC found that the HASMADAI group had been soliciting donations from the public, particularly in the CARAGA Region, under the pretext of charitable donations. However, the contributions, ranging from ₱5,000 to ₱20,000, were tied to promises of substantial returns in the form of “missionary allowances.” Donors were promised returns of between 27 percent and 34 percent of their original donation, with the expectation of a return of ₱8,100 for a ₱5,000 donation over six months, and ₱41,400 for a ₱20,000 contribution.
The SEC said these transactions constitute the sale of unregistered securities as the promised returns were solely dependent on the efforts of the organization. Under the Securities Regulation Code (SRC), securities must be registered with the SEC before they can be sold or offered to the public. The SEC maintained that HASMADAI’s solicitation was not voluntary charitable giving but a disguised investment scheme, violating securities laws.
Despite HASMADAI’s defense that the funds received were donations and not investments, the SEC rejected this argument. The group had contended that it was a religious entity supported by donations and shopping center profits. However, the SEC concluded that donors were motivated by the promise of financial return, not altruism.
“The use of the term ‘donation’ does not alter the fact that HASMADAI is offering unregistered investment contracts,” the SEC stated. The decision solidifies the regulatory body’s stance on protecting the public from unauthorized and potentially fraudulent investment schemes.
