SEC warns against investment in construction firm

The Securities and Exchange Commission (SEC) continues with its crackdown against the perpetrators of investment scams, according to a report by Philippine Star.

In an order dated Aug. 30, the SEC ordered AA Castro Construction and Aggregates Trading to stop offering and selling investments to the public in the guise of a construction business.

The SEC first issued an advisory warning the public not to invest in AA Castro last July 26.

The SEC’s Enforcement and Investor Protection Department (EIPD) found that AA Castro has been enticing the public to invest in its supposed construction business through public events, as well as through social media sites Facebook and YouTube.

AA Castro has promised the public around 30 to 40 percent returns every month for a minimum investment of P50,000.

The scheme involves the sale and offer of securities to the public in the form of investment contracts, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the SEC.

Payouts amounting to P4,400 to P4,700 were to be given weekly, taken from its supposed construction business that allegedly yielded P23.26 per 189 cubic meters of aggregates hauled.

The SEC said this is a violation of the Securities Regulation Code (SRC), which provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.

AA Castro is not registered either as a corporation or a partnership.

While its affiliate, AA Castro Hauling Construction Management and Aggregates Trading OPC (ACHCMATO), is a duly registered corporation with the SEC, it does not have a secondary license as issuer of securities or broker dealer.

Furthermore, the SEC noted that ACHCMATO’s registration papers showed that the company only had P3 million in capitalization, which would not be enough to sustain its promised payouts to the public.

“Payouts for investors are financed from investments of new recruits/investors. This is a fraudulent scheme, which will likely cause grave or irreparable injury or prejudice to the investing public,” the SEC said.