13 Sep SEC advisory: Be vigilant with unregistered foreign entities
THE Securities and Exchange Commission (SEC) is reminding the public to be vigilant when dealing with unregistered corporations after receiving questions on the implications of transacting with these entities online.
Entities are required under the law to register and get a primary registration with the commission to conduct business in the Philippines.
“If an entity or an activity is unlicensed or unregistered and is based abroad, you run the risk of not getting your money back once these are transmitted outside of the Philippines,” the SEC said in its advisory on Monday.
These entities apparently allow access their online platforms to create, enroll, or register client accounts even if they lack the needed registration or license to conduct business in the country.
Some of the unregistered online platforms identified by the SEC are of foreign currency brokers and exchanges, digital asset/cryptocurrency exchanges, decentralized finance investment platforms, yield farming/staking platforms, and multi-asset or multi-security brokerage companies.
These entities also have online platforms for securities token offerings, illegal investment scheme websites, binary options trading apps, pay-to-click or captcha websites, and “play-to-earn” gaming platforms as well as cryptocurrency gambling and investment websites.
“In some cases, Filipinos are even targeted by their aggressive online advertisements in various social media networking sites like Facebook, YouTube, or Instagram,” the SEC said.
The commission advised the public to avoid dealing with these entities.
The SEC said investors are only protected by the Philippine law if the foreign corporations or firms they invest in are duly registered with the commission to do business as a branch, regional operating or area headquarters, or as a representative office in the country.
The commission reminds investors to check with the SEC if a corporation or an entity is registered or not.
Compared to those registered with the SEC, putting money in an unregistered platform reachable in the Philippines can offer investors little to no protection in case of fraud or misconduct.
“Jurisdiction over fraud or any form of misconduct committed by these corporations falls under the jurisdiction of the foreign country where they operate,” the regulator said.
“Domestic participants would have to go to the country where these platforms are registered and where they operate to file the appropriate complaint in order to seek redress,” it added. — Keren Concepcion G. Valmonte