In the Matter of One Team Global Solutions, Inc.

December 8, 2015 SEC CDO CASE NO. 10-15-028 IN THE MATTER OF ONE TEAM GLOBAL SOLUTIONS, INC. ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT , movant . CEASE AND DESIST ORDER Before the Commission is a Motion for Issuance of a Temporary Cease and Desist Order ("Motion") 1 filed on 26 October 2015 by the Enforcement and Investor Protection Department (EIPD) of this Commission to enjoin ONE TEAM GLOBAL SOLUTIONS, INC. ("ONE TEAM") from further implementing its Personal Matrix scheme and any other activity that involve the offer and/or sale of securities to protect the public from unnecessary exposure. ONE TEAM was registered with the Commission on 9 February 2015 under SEC Registration No. CS201502248. 2 Its principal address is at 2nd Floor JPY Realty, Inc. #52 Kamuning Road, Quezon City. 3 It has a term of fifty (50) years. 4 The following are its primary purposes: 5 To engage in, conduct and carry on the business of buying, selling, distributing, marketing at wholesale and retail insofar as may be permitted by law, all kinds of goods, wares and merchandise of every kind and description; To enter into all kinds of contracts for the export, import, purchase, acquisition, sale at wholesale or retail and other disposition for its own account as principal or in representative capacity as manufacturer's representative, merchandise, broker indentor, commission merchant, factors or agents upon consignment of all kinds of goods, wares, merchandise or product natural or artificial, without acting as broker or dealer in securities, government securities eligible dealers (GSED), investment adviser of an investment company, close-end or open-end company, investment house, transfer agent, financial future exchange/broker/merchant, financing company, and time shares/club shares/membership certificate issuers or selling agents thereof. ONE TEAM's Authorized Capital Stock is One Million Pesos (P1,000,000.00), divided into Ten Thousand (10,000) shares with the par value of One Hundred Pesos (P100.00) per share. 6 Its board of directors, 7 as shown in its Articles of Incorporation, are: TAIaHE Name Nationality Residence Remegio M. Asuncion, Jr. Filipino 0133 Munting Pulo, Lipa City, Batangas Andrew Padilla Castillo Filipino #5 Firefly St., VV-6 Pasig City Maria Teresa M. Cantoria Filipino 4 Pampanga East, Bonifacio Village, Tandang Sora, Quezon City Sheryll M. Asuncion Filipino 338 Tangke St., Malinta, Valenzuela Daisy P. Cabanding Filipino 32 Mercury St., Villa Aurora, Tandang Sora, Quezon City The EIPD's investigation against respondent ONE TEAM stemmed from a Letter Complaint, 8 dated 30 July 2015 filed by a certain Jose Mari Sarita who claims that last 21 May 2015, he was enticed to invest in what he referred to a "Networking Company". According to Mr. Sarita, he invested the amount of One Thousand Six Hundred Ninety Pesos (P1,690.00) and was promised to earn a profit of Two Thousand Three Hundred Pesos (P2,300.00) within four (4) days. Later, on 2 June 2015, Mr. Sarita again invested the amount of Five Thousand Ninety-Four Pesos (P5,094.00) but was unable to earn any profit from this transaction. Mr. Sarita further states that ONE TEAM's office is located at 2nd Floor, FYJ Bldg., Kamuning, Quezon City. Also, a certain Thess is the President and a certain Andrew Padilla is the Vice-President. Acting on the directive of the Commission, a team of EIPD investigators ("EIPD Team") conducted a surveillance operation and proceeded to the principal office of ONE TEAM on 12 August 2015. The EIPD Team made the following observations, as reflected in its Field Investigation Report 9 on the surveillance operation: Upon arrival thereat, the team observed that there was no signage of the subject company. Then, the team asked the security guard of the building wherein the team was directed at the 2nd floor of the building. The team went inside the office pretending to be investors and inquired about the company. A female person approached the team and introduced herself as Rose, active agent of the subject company. She asked the team who invited or referred them and how they came to know about the company. In response, the team said through Mr. Sarita, member/investor of the subject company and thus, that we were interested in knowing about the company and the benefits of investing in it. The team was brought to their orientation room and started its business presentation. She explained that investing in such company would enable one to make more profits compared to other companies like Success 200, which is illegal. She showed the team different beauty products with corresponding package sets that one can invest in. She explained that the larger the amount invested the higher the income or profit an investor can get in an unlimited period of time depending on the downlines up to twelfth level. She also said that one can make more profits by direct referrals, Unilevel Bonus and Personal Matrix are described as follows: I. Unilevel Bonus You earn from every referral you recruit. Your referral fee depends on the package availed by your referral. For every repurchase of your referral, you get another cycle of referral fee! Earn from your referral recruit. We offer uni-level rewards up to twelfth level. (emphases by EIPD) II. Personal Matrix This new kind of scheme has not yet been implemented. Under this scheme, which is allegedly a "team effort," every slot is equivalent to TWO THOUSAND FIVE HUNDRED PESOS (Php2,500.00) and the exit for the graduated account is TWELVE THOUSAND FIVE HUNDRED PESOS (P12,500.00). Of course, for every slot that is bought, the investor would be receiving a package of products allegedly equivalent to the value of the slot. If the team completed the 15 slots as shown in the above illustration, the system will choose an account that will exit or a graduated account amounting to Php12,500. Under this scheme however, the person at the top need only to recruit two (2) persons who will represent his/her left and right downlines, after which, those downlines would recruit more downlines while the person at the top would just earn commissions for every referral until he graduates upon completion of the fifteen (15) slot requirement and receives the amount of is TWELVE THOUSAND FIVE HUNDRED PESOS (Php12,500.00) as his/her exit commission. Ms. Rose promised to inform the Team via text message when this new scheme would be launched. The team gave their contact number and proceeded to leave the premises. On 13 August 2015, a member of the EIPD Team received a text message purportedly from one of the representatives of ONE TEAM, which announced the introduction of a new "marketing plan" of ONE TEAM. The said text message reads: 10 Good Morning. We are inviting you to help and join us today at OTGS ofc @3pm to introduce our added mktng plan to help other peoples lives. We like to move it over. Your mission is our mission too. Let us help each other. SEE U L8TR PLS PASS. GOD BLESS US. On 20 August 2015, the EIPD Team again proceeded to the principal office of ONE TEAM to conduct surveillance. The following are the EIPD Team's observations, as reflected in the Field Investigation Report 11 on the surveillance operation: cDHAES The team proceeded to the destination to conduct an ocular inspection and surveillance in the launching of the new business scheme of One Team Global Solution, Inc. at their principal office address located in the Articles of Incorporation of the subject corporation at 2nd Floor, JPY Realty, Inc., No. 52 Kamuning Road, Quezon City. Upon arrival thereat, the team was approached by Rose Sayuman who was the same Rose referred to in the 12 August 2015 Field Report. She brought the team to their orientation room and started its business presentation through her laptop. Just like on August 12, 2015, she showed to the team the different beauty products with corresponding package sets that one can invest in, but this time the presentation is more focused in the Personal Matrix. Personal Matrix means allegedly a team-based effort system, wherein every slot is equivalent to TWO THOUSAND FIVE HUNDRED PESOS (Php2,500.00) and the exit or the graduated account is TWELVE THOUSAND FIVE HUNDRED PESOS (Php12,500.00). If the team completed the 15 slots as shown in the illustration below, the system will choose an account that will exit or a graduated account amounting to Php12,500. She then encourage [sic] the team to invest in so that the team can avail the first slot of the Personal Matrix or this is the exact words of Ms. Rose to quote "Paunahan kasi eto sir, para mauna rin mag exit ang account mo sir". She gave the team copies of their brochure with the contact number and their official website written on it. The team left the office at about 3:30 in the afternoon of the same date. Based on the foregoing initial findings, the EIPD recommended to the Commission that an Advisory be posted against ONE TEAM. On 4 September 2015, the said Advisory was posted in the Commission's website. 12 On 9 September 2015, the EIPD called the officers of ONE TEAM for a conference. At the conference, the following people appeared as representatives of ONE TEAM: Mr. Remegio M. Asuncion, Mr. Andrew Padilla Castillo, and Ms. Maria Teresa M. Cantoria. They were represented by Atty. Amiel A. Vicente. Also present during the conference were representatives from the Department of Trade and Industry, namely: Atty. Anselmo Adriano, Mr. Homer Bunyi, and Mr. Samuel F. Bolante. 13 During the conference, Mr. Castillo explained on behalf of ONE TEAM both the Uni-level scheme and the Personal Matrix scheme of ONE TEAM, which explanation basically echoed the explanation already given by Ms. Sayuman in her presentations during the EIPD Team's surveillance operations. 14 Concerning Mr. Castillo's explanation of the Uni-Level scheme, the explanation included the following points: a. Joining ONE TEAM through the scheme is by invitation or sponsorship by a member; 15 b. Product packages worth P2,500.00 shall be purchased by a joining member; 16 c. No employer-employee relationship exists between ONE TEAM and its members; 17 d. It is made clear to persons joining that membership in ONE TEAM is "not an investment contract" through the membership application form; 18 and e. The scheme, which is a standard uni-level scheme, is the same employed by Amway. 19 As to the Personal Matrix (binary) scheme, the following clarifications were made by Mr. Castillo: a. The scheme's structure was devised a month before the conference and is yet to be introduced by ONE TEAM; 20 b. ONE TEAM made no promotional activities as regards the scheme; 21 and c. The scheme was presented only to some of ONE TEAM's members in ONE TEAM's office. 22 Aside from the above explanations and clarifications on the schemes of ONE TEAM, the following points were clarified by ONE TEAM during the conference: a. ONE TEAM's operations started in February 2015; 23 b. ONE TEAM has around eight hundred (800) members; 24 c. Members can earn through selling products or sponsoring members ; 25 d. Members are being trained by ONE TEAM through the conduct of seminars, with training resources derived from sales income; 26 e. Products received by members are not available in the market as ONE TEAM is the exclusive distributor of said products; 27 and f. The high price of the perfume product as compared with other brands is justified by the product's quality, as "getting your money's worth." 28 ONE TEAM was likewise asked during the conference to submit the following documents to the Commission: 1) List of all members of ONE TEAM as well as their contact details; 2) Mayor's Permit; 3) Latest Financial Statements; 4) written explanation of ONE TEAM's marketing schemes; and 5) copies of delivery receipts from ONE TEAM's suppliers. 29 ASEcHI On 28 September 2015, ONE TEAM submitted the following documents: 1) Mayor's Permit; 30 2) Certificate of Registration from the Bureau of Internal Revenue; 31 3) Product Brochures; 32 4) Old Marketing Plan for Uni-level Matrix ; 33 5) New Marketing Plan for Personal Matrix ; 34 and 6) List of Active Members. 35 On 2 October 2015, the Commission's Corporate Governance and Finance Department, upon EIPD's request, issued a Certification 36 that ONE TEAM is not a registered issuer of mutual funds including exchange traded funds, membership certificates, time shares, and registered but unlisted securities under Section 17.2 (a) of the Securities Regulation Code (SRC) therefore not licensed to offer or issue such securities to the public. On 2 October 2015, the Commission's Markets and Securities Regulation Department issued a Certification 37 that ONE TEAM: (1) has not registered any securities pursuant to Sections 8 and 12 of the SRC; (2) was not issued a Permit to Sell securities by the Commission; and (3) has not filed nor has any pending application for registration/permit to sell securities. Based on the evidence available as well as the statements from ONE TEAM's officers and documents submitted by ONE TEAM to the Commission, the EIPD finds that there is sufficient evidence to conclude that ONE TEAM is engaged in the offer and/or sale of securities without a license, specifically in its implementation of its Personal Matrix scheme. Hence, this Motion . We find merit in the Motion . EIPD's Motion , as supported by substantial evidence, shows that ONE TEAM is engaged in the offer and/or sale of securities to the public in the form of investment contracts without the necessary license from the Commission. Securities are "shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character" 38 and includes an investment contract. 39 Section 8.1 of the SRC 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 Commission. In connection therewith, Section 12.1 of the SRC states that all securities required to be registered under Subsection 8.1 shall be registered through the filing by the issuer in the main office of the Commission, of a sworn registration statement with respect to such securities, in such form and containing such information and documents as the Commission shall prescribe. An "investment contract" has been defined as follows: 40 "G. An investment contract means a contract, transaction or scheme (collectively 'contract') whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others. 1. An investment is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits. 2. A common enterprise is deemed created when two (2) or more investors 'pool' their resources creating a common enterprise, even if the promoter receives nothing more than a broker's commission." The concept of an investment contract in the Philippines is of American origin. It traces its roots from the US Supreme Court case Securities Exchange Commission v. W.J. Howey Co . 41 where the Court stated that an investment contract is a transaction, contract, or scheme whereby a person (1) makes an investment of money, (2) in a common enterprise, (3) with the expectation of profits, (4) to be derived solely from the efforts of others. In a subsequent U.S. Supreme Court case, it was held that the element that profits must come "solely" from the efforts of others should be liberally construed because a literal reading of the requirement "solely" would lead to unrealistic results. It reasoned out that its flexible reading is in accord with the statutory policy of affording broad protection to the public. Because of this, it is no longer necessary that the expected profit accrue solely from the efforts of others. 42 The concept of an investment contract has since been transported in the Philippines. Thus, for example, in Power Homes Unlimited Corporation v. Securities and Exchange Commission , 43 the Supreme Court stated that an investment contract in our jurisdiction, to be a security subject to regulation by the Commission, must be proved to be (1) an investment of money; (2) in a common enterprise; (3) with expectation of profits, (4) primarily from efforts of others . Under this definition, whenever an investor relinquishes control over his or her funds and submits their control to another for the purpose of deriving profits from them, he or she is in fact investing in a security. 44 As to the first requisite, an investment of money occurs when an investor commits money to an enterprise or venture in a manner that subjects himself to financial loss. 45 In the case of the Personal Matrix scheme, members pay the amount of Two Thousand Five Hundred Pesos (P2,500.00) for an account or slot in the matrix. In return, the paying member receives a product package from a selection of packages for reselling. However, the amount paid for these products are far from their fair market value. Evidently, it can be seen that the member commits his/her money to ONE TEAM not for the purpose of retailing or personally using the products but more on the expectation of profits or gain of Twelve Thousand Five Hundred Pesos (P12,500.00) when all the referrals in the Personal Matrix are completed. As to the second requisite, there is a common enterprise. To reiterate, a common enterprise is deemed created when two (2) or more investors "pool" their resources. Several tests have evolved to determine what constitutes "common enterprise." 46 One of these tests is the horizontal commonality approach. Under this test, the determination of whether a transaction satisfies the commonality element of the modified Howey test involves an inquiry into whether the said transaction involves the joint participation of more than one investor in (i) the investment of funds or (ii) the sharing of profits. 47 Furthermore, joint participation by investors in the same investment enterprise, achieved by pooling the invested funds for a common purpose, is required in order to satisfy the common enterprise element. 48 ITAaHc In the case at bar, a common enterprise exists since there is a joint participation by the members and their referrals in the investment of funds. As clarified by ONE TEAM during the conference with EIPD, prospective members can only join ONE TEAM if such prospective members were invited or have a sponsor. 49 The cycle of earning begins once such members avail of any of the investment packages, wherein the members sponsor or recruit the first right and left downlines, who in turn will have to recruit their own downlines, until the 15 slots in the matrix are completed. As can be seen, the profits of the members are derived from the investment of all the referrals. Clearly, there is a pyramid scheme 50 that exists in ONE TEAM, which indicates a common enterprise. As to the third element, there must be an expectation of profits. By profits, the court has meant either capital appreciation resulting from the development of the initial investment, or participation in earnings resulting from the use of investors' funds. In such cases, the said investors are "attracted primarily by the prospects of a return on his investment." 51 In this case, the members avail of the packages with the view of receiving profits from ONE TEAM. In other words, the members flocked to ONE TEAM primarily for the income opportunity and not for the products offered by the latter ( e.g. , perfume, soap, or toiletries). In fact, the products available in the product packages appear to be overpriced. The following table shows the suggested retail price for reselling of ONE TEAM products: 52 Personal Binary Matrix Product Package List Product Packages Products Product Package SRP Price Package 1 Hombre Set P2,500.00 P3,500.00 Hombre Whitening Soap P500.00 Hombre Whitening Face Cream with P800.00 Sunscreen (SPF30) Hombre Whitening Masculine Wash P700.00 Hombre Whitening Deodorant P600.00 Hombre Whitening Lotion with P900.00 Sunscreen (SPF30) Package 2 Lumina Set P2,500.00 P3,500.00 Lumina Whitening Soap P500.00 Lumina Whitening Face Cream with P800.00 Sunscreen (SPF30) Lumina Whitening Feminine Wash P700.00 Lumina Whitening Deodorant P600.00 Lumina Whitening Lotion with P900.00 Sunscreen (SPF30) Package 3 2 Synonyms Perfume P2,500.00 P3,500.00 Package 4 2 Synonyms Perfumed Body Lotion P2,500.00 P3,500.00 Package 5 1 Synonyms Perfume, 1 Synonyms P2,500.00 P3,500.00 Perfumed Body Lotion Based on the suggested retail price as indicated in the list, it appears that the products are rather expensive; a discerning consumer will unlikely pay for these kinds of products at such high price. Consequently, selling the products to a common buyer at such price will not translate to good profits or good sales; this conclusion can be reached even by an ordinary reasonable mind. Moreover, aside from claiming that a buyer will be getting his "money's worth" for the products, no other justification was shown by ONE TEAM for the price of the products despite ONE TEAM being given the opportunity to do so. Consequently, it is immensely unbelievable that a member or potential investor would set his sights on earning profits through selling the products. On the other hand, it is evidently apparent that a member would rather avail of the product packages for the opportunity to earn a larger profit of P12,500.00, considering that the Personal Matrix scheme emphasizes on the opportunity to earn such a large profit. The element of product selling is merely ornamental or accessory to the primary objective of the investor, that is, to earn the exit amount of P12,500.00. Product selling is merely of secondary importance since it is only a condition for one to be able to participate in, and avail of the benefits of, the Personal Matrix scheme. Clearly, the third element is present and there is an expectation of profits from the members of ONE TEAM. Lastly, as to the fourth element, there must be the expectation of profits primarily from the efforts of others. In this case, the operations and management rests upon ONE TEAM and the members do not participate in such operations or management thereof. Moreover, the profits arise primarily from the efforts of the member's downlines with the member having to participate only in recruiting his first left and right downlines; the rest of the slots in the matrix have to be completed by the recruitment of the downlines. With respect to the claim of ONE TEAM that the Personal Matrix scheme has not yet been implemented, we are not convinced. CHTAIc First, the scheme was already formally presented to potential members as a way of earning in ONE TEAM by one of its agents, Ms. Rose Sayuman, within its principal business office. Based on the Field Investigation Reports of the EIPD Team, 53 the business presentations on the scheme were given by Ms. Sayuman on two separate occasions to the EIPD Team, posing as investors, during surveillance operations in ONE TEAM's principal business office conducted on 12 August 2015 and 20 August 2015. It is reasonable to conclude that the same scheme was likewise presented to persons other than the EIPD Team who are likewise strangers to ONE TEAM. The only plausible purpose for making such business presentation to strangers is to entice and convince them to invest their money in the scheme. Moreover, the statement of Ms. Sayuman during the 20 August 2015 business presentation to the effect that an early investment results to an early graduation or exit from the scheme and consequently an early collection of profits 54 is clearly an attempt to convince the EIPD Team to participate in the scheme. Second, the introduction of the scheme to potential investors is confirmed by ONE TEAM's announcement through text message of the event wherein the scheme will be introduced. The above mentioned acts of ONE TEAM negates its statement that the Personal Matrix scheme is not yet implemented. Rather, the only plausible purpose for such acts of ONE TEAM is to entice potential investors to invest in ONE TEAM through the scheme. Finding all the elements of an investment contract present, ONE TEAM should be considered as to be engaged in selling and/or offering for sale of investment contracts which is considered as securities as provided under the SRC. In view of the above discussions, we see two (2) violations by ONE TEAM. First, non-registration of securities. Under the SRC, unless what is involved are exempt securities or exempt transactions which are not covered by the requirement of registration, 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 Commission. 55 Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser. 56 As discussed above, ONE TEAM is engaged in the offering and/or selling of securities in the form of investment contracts which need prior registration with the Commission. Second, non-registration as broker or dealer. The law provides that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer unless registered as such with the Commission. 57 In the instant case, ONE TEAM and/or all persons acting for and in its behalf are acting as either broker or dealer without being registered as such. Third, commission of ultra vires acts. No corporation shall possess or exercise any corporate powers except those conferred by the Corporation Code or by its Articles of Incorporation and except such as are necessary or incidental to the exercise of the powers so conferred. In this case, the Personal Matrix scheme is off tangent with the primary purpose of ONE TEAM, which, as stated in its Articles of Incorporation, is that of a general trading company. Nowhere in the primary purpose of ONE TEAM is it stated that ONE TEAM can engage in the business of soliciting and accepting investments and money placements from the public. ONE TEAM's Certificate of Incorporation states that it is not authorized to undertake business activities requiring a Secondary License from the Commission such as, but not limited to, acting as broker or dealer in securities , government securities eligible dealers (GSED), investment adviser of an investment company, close-end or open-end company, investment house, transfer agent, financial future exchange/broker/merchant, financing company, and time shares/club shares/membership certificate issuers or selling agents thereof; 58 said statement in the Certificate of Incorporation is amplified in the second paragraph of ONE TEAM's primary purpose. 59 Consequently, the issuance of the Cease and Desist Order is justified pursuant to Section 64 60 of the SRC. In relation thereto, two essential requirements must be complied with before a cease and desist order is issued: First , a proper investigation or verification was conducted; and Second , there must be a finding that the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public. 61 As to the first requirement, EIPD conducted two (2) surveillance operations and a conference with ONE TEAM as evidenced by its reports and gathered records and documents showing ONE TEAM's investment schemes. The certifications of MSRD and CGFD were obtained which indicate that ONE TEAM is not licensed to sell securities. It is evident therefore that EIPD properly investigated and studied the nature and operations of ONE TEAM. As to the second requirement, the scheme offered by ONE TEAM will operate as a fraud on investors or likely to cause grave or irreparable injury. The Supreme Court, in a case, held that a transaction similar to the case at hand is not a legitimate investment strategy but a gullibility scheme, which works only as long as there is an ever increasing number of new investors joining the scheme. It is difficult to sustain over a long period of time because ONE TEAM needs an ever larger pool of later investors to continue paying the promised profits to early investors. The idea behind this type of swindle is that the "con-man" collects his money from his second or third round of investors and then absconds before anyone else shows up to collect. Necessarily, these schemes only last weeks or months at most. 62 Moreover, ONE TEAM is explicit in apprising the potential investor that the participation in the scheme is not investment contract, as stated in the application form, copies of which were submitted by ONE TEAM to the Commission. 63 As it is clear that the Personal Matrix scheme is an investment contract, this statement likewise shows that the scheme will operate as a fraud on investors. Hence, the issuance of the CDO is justified. EATCcI WHEREFORE, premises considered, ONE TEAM GLOBAL SOLUTIONS, INC., its partners, officers, directors, agents, representatives, conduits, assigns, and any and all persons claiming and acting for and in their behalf are hereby ordered to IMMEDIATELY CEASE AND DESIST, UNDER PAIN OF CONTEMPT, from engaging in activities of selling and/or offering for sale securities in the form of investment contracts or any others of the same nature, as discussed in this Order , until the requisite registration statement is duly filed with and approved by the Commission and the corresponding to offer/sell is issued. The Commission will institute the appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, agents, brokers, dealers or the like for and in behalf of the subject corporations. The Enforcement and Investor Protection Department is hereby DIRECTED to: 1) serve this Order to ONE TEAM GLOBAL SOLUTIONS, INC., its President, General Manager, Corporate Secretary, Treasurer, In-House Counsel or Partners; 2) post copies of the Order at the entrance of the main office and/or branches, if any, of ONE TEAM GLOBAL SOLUTIONS, INC. Let a copy of this Order be also posted in the Commission's website; published in a national newspaper of general circulation and furnished to all operating departments and offices of the Commission for their information and appropriate action. EIPD, in coordination with other concerned departments, is FURTHER DIRECTED to submit a formal compliance report, by way of a pleading, to the Commission En Banc within five (5) days from receipt of this Cease and Desist Order . In accordance with the provisions of Sec. 64.3 64 of SRC and Sec. 10-3 of the 2006 Rules of Procedure of the Commission, the parties subject of this Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt hereof. FAIL NOT UNDER PENALTY OF LAW. SO ORDERED. Mandaluyong City, Philippines, December 8, 2015. (SGD.) TERESITA J. HERBOSA Chairperson (SGD.) MANUEL HUBERTO B. GAITE Commissioner (On Official Leave) ANTONIETA F. IBE (SGD.) EPHYRO LUIS B. AMATONG Commissioner (SGD.) BLAS JAMES G. VITERBO Commissioner Footnotes 1. Dated 21 October 2015. 2. Annex "B" of the Motion , p. 63 records. 3. Annex "C" of the Motion , p. 59 records, Third Article. 4. Ibid. , p. 59 records, Fourth Article. 5. Ibid. , p. 60 records, Second Article. 6. Ibid. , p. 57 records, Seventh Article. 7. Ibid. , p. 58 records, Sixth Article. 8. Annex "A" of the Motion , p. 73 records. 9. Annex "F" of the Motion , p. 51 records. 10. Annex "G" of the Motion , p. 45 records. 11. Annex "H" of the Motion , p. 44 records. 12. http://www.sec.gov.ph/notices/advisory/2015_SECAdvisory_One_Team_Global_Solution.pdf , last accessed on 5 November 2015. 13. Annex "I" of the Motion , p. 42 records. 14. Ibid. , p. 41 records. 15. Ibid. , p. 42 records, lines 5, 6, and 7. 16. Ibid. , p. 42 records, lines 10 and 11. 17. Ibid. , p. 41 records, line 1. 18. Ibid. , p. 41 records, line 3. 19. Ibid. , p. 41 records, lines 6 and 7. 20. Ibid. , p. 41 records, lines 16 and 17. 21. Ibid. , p. 41 records, lines 28 and 29. 22. Ibid. , p. 41 records, lines 29 and 30. 23. Ibid. , p. 41 records, line 11. 24. Ibid. , p. 41 records, lines 10 and 11. 25. Ibid. , p. 41 records, line 12. 26. Ibid. , p. 42 records, lines 7 and 8. 27. Ibid. , p. 42 records, lines 9 and 10. 28. Ibid. , p. 41 records, lines 13 and 14. 29. Ibid. , p. 41 records. 30. Annex "K" of the Motion , p. 30 records. 31. Annex "L" of the Motion , p. 29 records. 32. Annex "M" of the Motion , p. 21 records. 33. Annex "N" of the Motion , p. 15 records. 34. Annex "O" of the Motion , pp. 1-8 records. This Annex includes the following documents: (1) Personal Binary Matrix Product Package List; (2) Personal Binary Matrix Cycle Illustration; (3) Chart on Unilevel Bonus; (4) Unilevel Direct Selling Pricelist; (5) One Team Global Application Form; and (6) Terms of Use of the One Team Global Solutions, Inc., website. 35. Annex "P" of the Motion , p. 1 records. 36. Annex "E" of the Motion , p. 52 records. 37. Annex "D" of the Motion , p. 53 records. 38. Section 3.1., Securities Regulation Code (SRC). 39. Section 3.1. (b), Id. 40. SRC Rule 3 (1) (G), Amended Implementing Rules and Regulations (IRR) of the SRC. 41. 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244, 163 A.L.R. 1043 (1946). 42. SEC v. Glenn W. Turner Enterprises, Inc. , 474 F. 2d 476, 414 U.S. 821, 94 (1973). 43. G.R. No. 164182, 26 February 2008. 44. Investment Co. Institute v. Camp , 274 F. Supp. 624 (D. D.C. 1967). 45. SEC v. International Mining Exchange, Inc ., 515 F. Supp. 1062. 46. In the Matter of Octopus Network, Inc. , SEC-PED Case No. 98-2220, 22 May 1998. 47. Note 42, citing 69 Am Jur 2d citing Stenger v. R.H. Love Galleries, Inc. , 741 F2d 144. 48. Note 42, citing Wasnowic v. Chicago Bd. of Trade , 352 F. Supp. 1066. 49. Note 15. 50. People v. Balasa , G.R. Nos. 108601-2, 3 September 1998, in citing the Consumer Act of the Philippines (RA 7394), defines a pyramid scheme as a sales device whereby a person, upon condition that he makes an investment, is granted by the manufacturer or his representative a right to recruit for profit one or more additional persons who will also be granted such right to recruit upon condition of making similar investments: Provided , That, the profits of the person employing such a plan are derived primarily from the recruitment of other persons into the plan rather than from the sale of consumer products, services and credit; Provided, further , That the limitation on the number of participants does not change the nature of the plan. 51. Power Homes , supra . 52. Annex "O" of the Motion , p. 7 records. 53. See notes 9 and 11. 54. Annex "H" of the Motion , p. 43 records, last paragraph of the Field Investigation Report. 55. Section 8.1., SRC. 56. Id. 57. Section 28.1., SRC. 58. Annex "B" of the Motion , p. 63 records. 59. See Note 5. 60. Section 64.1., SRC. The Commission, after proper investigation or verification, motu proprio , or upon verified complaint by any aggrieved party, may issue a cease and desist order without the necessity of a prior hearing if in its judgment the act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public. 61. Securities and Exchange Commission vs. Performance Foreign Exchange Corporation , G.R. No. 154131, 20 July 2006. 62. People v. Romero, et al ., G.R. No. 112985, 21 April 1999. 63. Annex "O" of the Motion , p. 3 records. 64. SRC, Section 64.3. Any person against whom a cease and desist order was issued may, within five (5) days from receipt of the order, file a formal request for a lifting thereof. Said request shall be set for hearing by the Commission not later fifteen (15) days from its filing and the resolution thereof shall be made not later than ten (10) days from the termination of the hearing. If the Commission fails to resolve the request within the time prescribed, the cease and desist order shall automatically be lifted.