"DYMs" or Double Your Money Schemes

March 31, 2022 ENFORCEMENT AND INVESTOR PROTECTION DEPARTMENT SEC ADVISORY This Advisory is prompted by reports received by the Commission on the illegal investment-taking activities of several individuals offering "DYMs" or Double Your Money schemes. Based on information gathered, reports received and Facebook posts, several individuals from Davao are apparently proliferating several investment taking schemes all of which promise lucrative returns as far as doubling the investor's money in just one month . The individuals or entities proliferating this investment-taking scheme do not have a real business model to back up the profits that are going to be given to prospective investors. Essentially, the income generated from the foregoing investment-taking scheme depends on the number of referrals, membership fees and/or prior investments received by the entities. The investment-taking schemes proliferated by these individuals has the characteristics of a "Ponzi Scheme" where the 'income' given to the initial investors are taken from the subsequent investors. This business model is unsustainable and will inevitably result in the demise of the business which directly results in the prejudice of the investors. The Davao Extension Office of the Commission has previously posted an advisory against the said individuals and/or entities, giving a warning to the public to be wary of such investment-taking schemes. To wit: Securities and Exchange Commission March 4, 2022 SEC Davao reminds public on illegal double-your-money (DYM) schemes DAVAO CITY The Securities and Exchange Commission-Davao Extension Office (SEC-DEO) has reminded the public to be mindful in investing their hard-earned resources following reports from Davao City residents that there are new illegal double-your-money (DYM) schemes coming out in the city. Based on reports reaching some radio stations, a new scheme is coming out in the southern part of Davao City promising a double-your-money scheme where someone who invests P1,000 will get P2,000 after 30 days. "We are coordinating with the Davao City Anti-Scam Unit to look into these report and prevent this DYM scheme from getting out of hand and from victimizing more individuals," the office said. An investment scheme is illegal if an individual or entity is taking in investments from the public without a secondary license from the Commission. Aside from the absence of a secondary license, the public must also employ the use of Howey Test. Under this, there is an investment contract when there is an investment of money in a common enterprise with expectation of profits primarily from the efforts of others or from recruits. "One telling reason for the public to shy away from this investment is that, based on the reports, this new DYM scheme is strictly implementing a no refund policy," the office added. Section 8 of Republic Act No. 8799, or The Securities Regulation Code, 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. A maximum fine of P5 million or imprisonment of 21 years or both await those who act as salesmen, brokers, dealers or agents of entities engaged in unauthorized investment schemes, for violation of Republic Act No. 8799, or The Securities Regulation Code Securities Regulation Code, n among others. The Commission also encourages the public to report unauthorized investment solicitation activities to its Enforcement and Investor Protection Department through email at [emailprotected] . ### Page 1 of 1 Securities and Exchange Commission-Davao Extension Office 2F SDC Bldg., Purok 13 Maa Road, Davao City 0915-327-4459, 0933-455-3547 Applying the Howey Test , 1 the investment-taking schemes employed by these entities or individuals are in the nature of "investment contracts" as they involve the offering and sale of securities to the public where investors need not exert any effort other than to invest or place money in its scheme in order to earn profits. Therefore, entities proliferating such investment-taking schemes must be duly registered with the Commission and that any person or entity intending to offer and sell its investment contracts are required to secure the necessary registration and/or license from the Commission as provided under the Securities Regulation Code. Entities or corporations that offer securities to the public that lack prior registration with the Commission makes its activities illegal for lack of the necessary licenses and authority from the SEC. Hence, the public is advised NOT TO INVEST or STOP INVESTING in any DIY or Double Your Money investment-taking schemes offered by individuals or entities who operate without the necessary licenses and/or authority. Accordingly, the Commission warns all unscrupulous individuals and/or entities that strict penalties are imposed for violations of the Securities Regulation Code, the Revised Corporation Code, and such other rules and regulations enforced by the Commission . Those who act as salesmen, brokers, dealers or agents of such unauthorized entities like the operators of the individuals who are operating in Davao in selling or convincing people to invest in their investment scheme offered including solicitations and recruitment through the internet may likewise be criminally prosecuted and penalized with a maximum fine of Five Million pesos (P5,000,000.00) or a penalty of Twenty-one (21) years of imprisonment or both pursuant to Sections 28 and 73 of the SRC. The names of all those involved will also be reported to the Bureau of Internal Revenue (BIR) so that the appropriate penalties and/or taxes be assessed correspondingly. Should you have any information regarding any investment solicitation activity by any individual or group of individuals who propagate DYMs or Double Your Money schemes , please send your report to the EIPD at [emailprotected]. For the guidance of the public. Pasay City, March 31, 2022. Footnotes 1. Power Homes Unlimited vs. SEC (G.R. No. 164182, February 26, 2008). n Note from the Publisher: Copied verbatim from the official document.