The revocation order against New Seataoo Corporation and Seataoo Information Technology OPC issued by the Enforcement and Investor Protection Department (EIPD) of the SEC outlines several key points:
- Background:
- Seataoo Information Technology OPC was registered on October 4, 2022, and New Seataoo Corporation on May 12, 2023.
- Seataoo was advertised as a cross-border e-commerce platform offering dropshipping services.
- Violations:
- Seataoo engaged in unauthorized solicitation of investments from the public, which is prohibited under Section 8 of the Securities Regulation Code (SRC) since they did not secure the necessary registration and license from the Commission.
- The company was involved in investment fraud, violating Section 11 of the Financial Products and Services Consumer Protection Act (FCPA). The business model resembled a Ponzi scheme, promising profits sourced from the investments of other investors.
- Seataoo’s operations did not align with the activities permitted by its Articles of Incorporation. Instead of legitimate e-commerce transactions, they implemented a scheme where sellers were essentially investors expecting returns from their initial payments.
- Evaluation of Business Mechanics:
- The company’s business model involved sellers paying for products upfront and receiving their principal along with profit after some time, which qualifies as an investment contract under the SRC.
- The advertised dropshipping services were misrepresented, as sellers could not directly sell to customers and the provided links did not lead to individual stores.
- Consequences:
- The SEC imposed a fine of One Million Pesos (P1,000,000.00) on Seataoo for offering unregistered securities to the public.
- The company’s Certificate of Incorporation was revoked for serious misrepresentation and engaging in unauthorized investment activities.
- The order directed the company and its incorporators to pay the fine within fifteen days and mandated that the status of the corporation be updated to “revoked” in the SEC’s online database.
The revocation was deemed necessary to protect the public from the deceptive practices and unauthorized investment solicitations conducted by Seataoo .
WHAT IS THE DEFINITION OF SEC WHY THEY REVOKED SEATAOO REGISTRATION
The revocation of Seataoo’s registration by the Securities and Exchange Commission (SEC) involves several key points based on their order. Here’s a concise definition and explanation from the document:
Definition and Grounds for Revocation:
- Unauthorized Investment Solicitation:
- Seataoo solicited investments from the public without the necessary registration and/or license from the SEC as required under Section 8 of the Securities Regulation Code (SRC). This act was unauthorized and violated the SEC’s regulations.
- Investment Fraud:
- Under Section 11 of Republic Act No. 11765 (Financial Products and Services Consumer Protection Act), investment fraud is defined as any deceptive solicitation of investments from the public, including Ponzi schemes and other similar schemes. Seataoo engaged in such fraudulent activities by offering investment schemes without a license, which involved promises of profits sourced from the contributions of new investors.
- Misrepresentation and Ultravires Acts:
- Seataoo’s activities included serious misrepresentation of their business operations. They presented themselves as a legitimate e-commerce platform but operated an investment scheme, manipulating seller dashboards and issuing incomplete invoices. This misrepresentation caused significant harm to the public.
- Violation of Corporate Purpose:
- As a juridical person, Seataoo was only permitted to exercise powers outlined in its Articles of Incorporation. However, Seataoo engaged in activities beyond their stated primary purpose, particularly in soliciting investments, which was explicitly prohibited.
Key Points from the Order:
- Investment Scheme Characteristics:
- The scheme involved contracts where investors placed money with the expectation of profit, pooled in a common enterprise managed by Seataoo. The profits were expected to come from the efforts of Seataoo rather than the investors themselves, fitting the definition of an “investment contract” under the SRC.
- Affiliate Program:
- Seataoo offered an affiliate program, promising commissions to sellers for referred sales, further indicating the investment nature of their operations rather than genuine e-commerce activities.
- Administrative Actions:
- The SEC issued a Show Cause Order to Seataoo, directing them to explain why no sanctions or criminal charges should be imposed for violations of the Securities Regulation Code and other relevant laws. The SEC ultimately decided to revoke Seataoo’s registration due to these violations and the serious misrepresentation involved.
The SEC’s revocation order thus highlights Seataoo’s unauthorized investment solicitation, engagement in fraudulent schemes, serious misrepresentation of their business activities, and violation of their corporate purpose as grounds for the revocation of their registration.
WARNING
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Ito ay halimbawa ng chat na hindi po ako.
Hindi po ako yang kausap ng isang Seller.
Ano ang susunod?
Nakausap ko po ang taga SEC and ang sabi sa akin ay pwede namang i-appeal ang REVOCATION ORDER. Ibig sabihin po ng Revocation ay wala ng saysay sang Registration ng Seataoo. Ni-revoke ang Registration at hindi na ito legally registered sa SEC. Magkaiba ang Revocation sa Closure Order. Hindi po iniutos ng SEC na ipasara ang Seataoo, bagkus pinag-cocomply lamang sa registration.
Maghintay po tayo sa magiging advice o announcement ng Seataoo.
Hindi makapag-withdraw?
Make sure po na tama ang nasa Payment Settings. Kausapin ang Account Specialist. Ito po ang email ng Account Specialists: [email protected], at [email protected]