How To Avoid Becoming A Victim Of Investment Scams6 min read
Earlier this month, the Securities and Exchange Commission (SEC) issued a cease-and-desist notice to Kapa-Community Ministry International (KAPA), a religious group that solicits investments from its members with a promise of guaranteed returns.
In a press statement released on February 25, the commission revealed that the said company has been selling investment contracts to unsuspecting members looking for a way to grow their finances.
No license to solicit for investments
Although KAPA is registered with the SEC
According to the rules of the SEC, a secondary license is required by the agency to be able to undertake
KAPA works in two ways: first, it
In addition to the cease-and-desist order, the agency also ordered KAPA and its associates to take down its video presentations on the internet and barred the company from liquidating its assets “for the benefit of the investors, respondents, or any of their representatives.”
A few days after the SEC order, KAPA released a memo through the Facebook pages of its different chapters that people
(Read: SEC Releases Guidelines For Initial Coin Offerings And Legal Crypto Trading)
Ponzi scheme versus pyramid scheme
The SEC believes that KAPA’s
By the time people start to demand
A Ponzi scheme has two striking characteristics. First, it lures people with the promise of huge guaranteed returns. Second,
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More than a decade ago, one of the biggest Ponzi schemes in the Philippines was dismantled. According to reports, FrancSwiss Investment was able to swindle around P1 billion from numerous investors. Celebrities, athletes, and broadcast journalists were among those who fell prey to this scam.
Although similar in terms of the need for more members, a pyramid scheme is different from a
Another prominent difference between
How can you protect yourself from bad investments?
Every now and then, the media will catch a whiff of an SEC advisory regarding a certain business’ dubious activities. However, it might be too late for some people who already fell for bad investments hook, line, and sinker.
If you don’t want to quickly part ways with your hard-earned money, you should watch out for the following signs that you’re dealing with a fraudulent company:
- The biggest red flag of them all is when they promise quick, easy, and risk-free investments.
- Scammers tend to pressure you into investing as quick as possible; sometimes, they want you to shell out money in that moment.
- They have inside information such as hot tips and rumors that will give their investors and edge.
- They bombard you with testimonials from other investors and tempt you with riches that can get you exotic cars, houses, and other shiny things.
- They manipulate you into feeling guilt by comparing your day job with slavery or some form of imprisonment.
(Read: Scam Alert: Beware Of Phishing Attempts From ‘Official’ Email Addresses And Phone Numbers)
When someone offers you to invest in their company, one of the most basic ways they can trick you about their legitimacy is by saying they’re an “SEC-registered company.” However, any entity
According to Section 12 of the Securities Regulation Code, the SEC issues a separate license for
To check if a company is authorized by the SEC, you can go to the agency’s website and use the search function. If
In the old days, a company without a website was a telltale sign that they are running a scheme. However, building a website has become much easier nowadays and anyone can just beef up
If you feel like you’re being lured in an investment scam, contact the SEC’s Enforcement and Investor Protection Department at 818-5704. You can also reach the SEC through their i-Message Mo
Investing isn’t about guaranteed returns. As with anything, any form of investment has a chance of going down.
If an investment is too good to be true, it most certainly is. And as always, only invest the money you can afford to lose.
Other sources: Chan Robles, SEC