The Securities and Exchange Commission (SEC) has canceled the corporate registration of TogaChat Academy Philippines Inc. for running an unauthorized investment program resembling a Ponzi scheme.
There’s scarce information about the company but TogaChat is said to be a developer of a social media app which it is using to engage with the public.
The SEC issued the order of revocation on January 23, after finding TogaChat to have engaged in investment solicitation activities by selling or offering securities to the public without the necessary license. The company’s activities also constituted serious misrepresentation as to what it can do to the great prejudice or damage to the general public, according to the SEC.
The SEC initially issued on July 17, 2019 an advisory warning the public against investing in TogaChat. It then issued on December 17, 2019 a cease and desist order against the company.
Under its investment program, TogaChat entices the public to avail of a package of Toga Credits, which investors may purportedly use to buy shares in Toga Limited upon its supposed listing on Nasdaq. The company offers seven packages worth $100 to $100,000 in exchange for 200 to 500,000 Toga Credits.
Investors may pay for a package in US dollars or the peso equivalent. TogaChat encourages a member to recruit another investor by giving him/her Toga Credits equivalent to 50% of what the new investor would avail of. Members may earn additional Toga Credits from pairing bonuses.
The company’s agents also claim that Toga stocks are traded on Toga Exchange, an internal platform of Toga Limited where the buying and selling of stocks occur. The SEC said the scheme falls within the definition of securities, particularly investment contracts. A security may take the form of an investment contract the SEC noted.
However, records of the SEC showed that no application for the registration of securities has been filed by TogaChat. “More so, the act of respondent TogaChat in allowing its members to discuss, orient and make the public familiar with its schemes and inviting them to join the company through its Facebook account posts constitutes public offering,” the SEC said.
In addition, the investment scheme of TogaChat resembled a Ponzi scheme, an investment program that offers impossibly high returns and pays these returns to early investors out of the capital contributed by later investors, according to the SEC.
