The Securities and Exchange Commission (SEC) warns the public against these three investments since they can be Ponzi Schemes. Here’s what we know about them so far. 

According to the 2022 TransUnion Consumer Pulse Survey, 53% of Filipino respondents have been victims of fraudsters. The survey also reported that Filipinos commonly fall for digital frauds like phishing, money and gift scams, and retail rackets. 

With these alarming figures, the Securities and Exchange Commission (SEC) is advising the public to be vigilant and avoid suspicious investments. In fact, the commission released a Facebook post warning against companies like Moneyfescent Global Ventures OPC, Zyndex Trading, and E-ton Trading. 

“Batay sa mga ulat at impormasyong nakalap ng Securities and Exchange Commission (SEC), ang mga ito ay nag-aalok at nangangalap mula sa publiko ng investment o anumang halaga kapalit ng pangakong kita, tubo o interes. Tandaan na ang mga ito ay HINDI REHISTRADO at WALANG PAHINTULOT mula sa SEC upang mangalap ng investment mula sa publiko.”

“According to the information gathered by the Securities and Exchange Commission (SEC), these schemes ask the public for whatever amount in exchange for a sure earning or interest. These schemes are NOT REGISTERED and HAVE NO PERMISSION from SEC to ask for investment from the public,” the SEC wrote on Facebook. 

How it Works

Furthermore, the commission said that these entities show signs of being a Ponzi Scheme, as they promise returns that are too good to be true. Defined as an “investment fraud that pays existing investors with funds collected from new investors,” a Ponzi Scheme claims to generate high returns with little or no risk.

In some cases, fraudsters tell investors that they will grow their money by investing in other investment vehicles like the stock market. But in reality, they just give the early investors the returns from the late investors. That cycle continues until fraudsters can still convince unknowing investors. 

A case in point is E-ton Trading. In an advisory from SEC, E-ton invites the public to invest from PHP 5000 to PHP 100,000. The investors can earn from 20 to 50% monthly, plus the 5% rebate for fresh cash-ins. SEC added that E-ton promises that, “the longer the lock-in period, the higher the investor may earn.”

To set things into perspective, traditional banks only offer less than 1% interest annually. Digital banks—which are known to be generous in giving out interest earnings—can only go up to 6%. 

The commission further emphasized, “E-TON TRADING / ETON PHIL TRADING / E-TON TRADING: PROFIT SHARING, is NOT REGISTERED as a corporation or partnership and OPERATES WITHOUT THE NECESSARY LICENSE AND/OR AUTHORITY to solicit, accept or take investment/placements from the public nor to issue investment contracts and other forms of securities defined under Section 3 of the Securities Regulation Code (SRC).” 

E-ton Trading is reported to be dealing with the selling of frozen goods. Meanwhile, Zyndex Trading claims to be a trading platform. And SEC already released a cease and desist order for its invest-solicitation activities. On the other hand, Moneyfescent is a direct selling company using the binary system, like how Multi-Level Marketing (MLM) companies do. 

Flashbacks of Kapa

This kind of fraudulent scheme is not new in the Philippines. In fact, last 2019, President Duterte launched a campaign against the Kapa Community Ministry International. The entity started from Mindanao and crept to Luzon over the years—promising returns of at least 30% per month. 

With the help of the National Bureau of Investigation (NBI), Duterte ordered the shutdown of the investment scheme. “Imagine, your PHP 100,000 earns PHP 30,000 a month? Even our Bangko Sentral can only give 3 percent, and that’s annual[ly]. I have been telling the Filipino people that if what is being promised to you is something like heaven [it’s fraud],” the President said in an interview.

Some politicians took advantage of this issue and the desperation of the Kapa members. The Philippine News Agency even reported that said politicians promised that will not let Kapa close, should they win the elections back then.

How to Avoid Scams

The SEC’s mandate includes protecting public investors, thus, it released an investment scam checklist that encourages Filipinos to think twice before investing or getting involved in any business or investment opportunities. 

According to SEC, do not deal with investment schemes if they are:

1. Unwilling or hesitant to give any information
2. Not SEC-registered or do not have an appropriate license
3. Not listed on the SEC website

(For inquiries, call the SEC Corporate Governance and Finance Department at 584-6103, or the Markets and Securities Regulation Department at 584-5703.)

Important Lesson: Be Careful!

Consumers are not the only victims of fraud. Being a bogus buyer is one of the rampant rackets now in the online selling industry. For business owners, here’s how to spot fraudulent customers online. 

Think, Examine, Study—the commission advised the public to always do these three things before investing in anything. Unfortunately, scammers and fraudsters have gotten smarter, and even the most discerning Filipinos have yet to learn more about avoiding scams. While the reasons for committing these fraudulent acts may vary from case to case, a desperate need to survive can be one reason.

However, the heavenly promise of an investment can destroy thousands of families and lifetime savings when done poorly. Thus, more than anything, remember that if the offer is too good to be true, it most likely is.