The Securities and Exchange Commission has made permanent the cease and desist order (CDO) it issued against Maria Francesca Tan (MFT) Group of Companies Inc. and Foundry Ventures I Inc.
It denied for lack of merit the omnibus motion filed by the MFT Group, Maria Francesca Mica F. Tan, Ronald G. Nery, Halmond Parker R. Ong, Maricris T. Tan, Jose Donnie B. Montelibano, Arlene C. Mauricio, Maria Beatriz Dolores R. Tomas and Mary Ruth A. Oquendo, asking for the lifting and the automatic lifting of the CDO.
The SEC similarly rejected the motion to lift the CDO filed by Foundry Ventures, Florita F. Tan, Charles Edward Tan, Christian Konstantin P. Agbayani, Chiqui Tan, Romarico Ruiz, Arlene Navarro, Joanne A. Caber, Thuy Nguyen, Roxanne Agbayani, Luis Gabriel R.Cancio, Noel M. Olan, JR Hernandez, Christian Olan, Tito Cosejo Jr. and Christian De Vera.
The SEC issued in mid-January this year the original CDO after the MFT Group, which later on transitioned to Foundry Ventures, was found to have engaged in the unlawful solicitation, offer, and/or sale of securities in the form of investment contracts without the necessary license from the SEC.
Based on complaints received and subsequent investigation, the MFT Group organized 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.
The MFT Group then issued post-dated checks that it never paid.
According to the regulator, the MFT Group deliberately used the term interest income to give the transactions a semblance of legitimacy that the group packaged as loans.
The Securities Regulation Code (SRC) prohibits the sale or distribution of securities without a registration statement filed with and approved by the SEC.
While registered as corporations, the MFT Group of Companies and Foundry Ventures have not secured the required secondary license and permit to sell securities as required by the SRC.
In its motion to lift the CDO, Foundry Ventures argued the loan agreements it issued were neither securities in the form of an investment contract nor evidence of indebtedness.
“[T]he Supreme Court ruled that commercial papers evidencing indebtedness, which certainly include loan agreements and checks, can be regarded as shares of stocks if issued pursuant to a scheme that enables the lenders to participate in the profits of the corporation (and actually expects a return on their investments),” the SEC said, citing the Gabionza case.
