Monday, June 17, 2024

SEC cancels poultry firm’s registration over illegal online solicitation

The Securities and Exchange Commission (SEC) has revoked the registration of Katuwang Poultry Chicken Egg Producing Co. as a partnership for illegally soliciting investments from the public online.

Photo from cottonbro via Pexels

In an order dated July 29, the SEC found that Katuwang Poultry has been publicly offering securities to the public through Facebook, without the necessary license from the commission.

The SEC warned the public against investing in Katuwang Poultry as early as September 21, 2021, through an advisory.

Katuwang Poultry has been offering investment packages worth at least P50,000, with promised returns of supposedly 48% to 120% within six months, depending on the amount invested.

For instance, investors with P50,000 to P99,000 in capital canreceive monthly dividends worth 8%, while those who invested more than P500,000 can earn monthly dividends of 20% over the course of six months.

Investors can also earn referral commissions worth 10% for every new member they invite into the system.

The act of Katuwang Poultry in allowing its members to discuss, orient and make the public familiar with its schemes and inviting them through its official Facebook page constitutes a public offering, which should be registered with the SEC.

However, it has never secured a secondary license from the agency to operate as a broker/dealer of securities, nor is it a registered issuer of any securities.

“Based on the evidence gathered, Katuwang Poultry is engaged in the offering, solicitation and sale of securities to the public without the required registration statement duly filed and approved by the SEC,” the order read.

The SEC likened the group’s investment offerings to a Ponzi scheme, where the returns paid to early investors are sourced from the capital contributed by later investors.

“The investment scheme of Katuwang Poultry also operates to defraud investors as it deceives the investing public by making it appear that it has the authority to deal in securities,” the SEC said, noting that the group has been using the certificate of registration issued by the commission to disguise itself as a legitimate investment.

“This amounts to serious misrepresentation as to what it can do or is doing to the damage and prejudice of the investing public.”

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