SEC issues twin warnings on investment, lending schemes

MANILA, Philippines – The Securities and Exchange Commission (SEC) has warned the public against an investment scheme linked to a fitness gym operator and an online lending app, saying the entities allegedly lack the required regulatory authority.

In an advisory, the SEC said Pro Fitness Gym Corporation was enticing the public to invest through a so-called “Gym Co-Ownership” program that promised dividends ranging from 3 percent to 35 percent of monthly net income.

READ: SEC warns vs unregistered schemes, crypto platforms

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The company allegedly marketed the scheme as an opportunity to co-own the gym business.

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The regulator said an SEC registration does not authorize the company to offer securities and investment products to consumers

Likewise, the regulator added that entities must register securities with the agency before legally offering or selling them.

As a result, the SEC urged the public to avoid or withdraw from the investment scheme promoted by Pro Fitness Gym and its representatives.

The regulator likewise warned that individuals acting as salesmen, brokers, agents, recruiters, endorsers, influencers and other promoters of the scheme could face criminal liability under the Securities Regulation Code and the Financial Products and Services Consumer Protection Act (FCPA). Penalties may include fines and imprisonment.

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In a separate advisory, the SEC warned the public against CredLadder, an online lending app reportedly conducting unauthorized lending and financing activities.

READ: SEC cracks down on illegal online lending platforms

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According to the commission, reports indicated that CredLadder imposed excessive interest charges and employed abusive collection practices, including the use of threatening and humiliating messages against borrowers.

The SEC said the platform was also reportedly using FlexiFund, FundXpress, QuickPesa and Paymatic as remittance agents in its lending transactions.

The SEC found that CredLadder actively advertised its services online and offered its app, “CredLadder: Credit Insights,” for download on Google Play.

However, the SEC said its database does not contain CredLadder or CredLadder: Credit Insights, and neither appears on its list of registered online lending platforms.

As such, its lending operations allegedly violate the Lending Company Regulation Act of 2007.

The regulator also noted that the reported collection methods may constitute abusive debt recovery practices prohibited under the FCPA and its implementing rules.

These include threats, insults, disclosure of borrowers’ personal information and contacting individuals in a borrower’s contact list who are not guarantors or co-makers.

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“The public is strongly advised to verify companies through the official SEC website and SEC Check App and avoid sending advance payments, refrain from sharing personal or financial information with unverified entities and exercise extreme caution when dealing with suspicious online offers,” the regulator said. /pai INQ