SEC secures conviction of six investment scammers

The Securities and Exchange Commission (SEC) has successfully secured the conviction of six individuals involved in an investment scam operated by GDM Finance SARL, marking the 22nd conviction for violations of the country’s securities law.

In a joint decision dated April 17, the Pasig City Regional Trial Court Branch 158 found Anita E. Armada, Milany P. Cabrera, Josephine D. Maranan, Nanette D. Tongco, Gerald L. Samson, and Jacinto Lucio P. De Catalina guilty beyond reasonable doubt of violating Sections 8 and 26 of Republic Act No. 8799, or the Securities Regulation Code (SRC).

The convicted individuals were sentenced to pay a total fine of P100,000 each, with subsidiary imprisonment.

The case stemmed from an information received by the SEC Enforcement and Investor Protection Department (EIPD) in July 2018, alleging that GDM had conducted a seminar in a mall where speakers enticed the audience to invest in GDM for a weekly return of at least 2.5%.

After conducting an on-site field investigation, the EIPD confirmed that GDM indeed engaged in investment-taking activities.

The investigation also uncovered that GDM had a Facebook account where it advertised that it
could pay dividends to shareholders and provide a steady return on investment received.

In November 2018, the EIPD, together with the Anti-Cybercrime Group of the Philippine National Police (PNP), conducted an entrapment operation where the accused were arrested.

Section 8 of the SRC explicitly prohibits the sale or distribution of securities without first being registered with the SEC. Likewise, Section 26 makes it unlawful for individuals to employ fraud, deceit, and omission to garner investments from the public.

GDM had not registered any securities with the Commission as required under the SRC. Neither had it secured a license to issue mutual funds, exchange traded funds and proprietary or non-proprietary shares or membership certificates and timeshares.

“In this case, it is clear that the accused is soliciting investment from the attendees and promises that the same will earn guaranteed profits through the placements that will be made by GDM,” the court stated.

“Additionally, the prosecution was able to establish that despite the securities being unregistered, such fact was not made known by the individual accused to its prospective investors who attended the orientation seminar. Thus, they are liable under Section 26.2 of the SRC for omitting a material fact that misleads the public into believing that the securities they offer are registered.”

To date, the SEC has secured the conviction of 33 individuals in 22 cases meted by the courts with a total imprisonment of 712 years and an aggregate fine of P28.4 million.

As of September 2023, 355 individuals are being actively prosecuted before the Regional Trial Courts in 145 cases for violations of the SRC and two cases for violations of Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act of 2022.

Furthermore, as of June 30, the SEC has filed criminal complaints against 31 corporations and 239 individuals before the Department of Justice, all of which are currently pending resolution.