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SEC Philippines Declares Cease And Desist Order Against Crowd1 Permanent

A permanent order has been made by The Securities and Exchange Commission (SEC) stopping CROWD1 Asia Pacific, Inc. from asking and receiving investments from the public under its scheme which is disguised as a digital marketing business. The commission issued a resolution on July 2, denying the motion to lift Cease and Desist Order Ad Cautelam filed by CROWD1 for lacking in merit. Therefore, declaring the cease and desist order permanent.

The resolution reads that a careful review of the motion to lift will show that except for its general denials, CROWD1 has failed in presenting any evidence in support of its claim that it is not engaging in the sale or offer for sale of securities in the form of investment contracts. The commission also found that they are operating “a fraudulent investment scheme consisting of the sale or offer of inexistent securities in the form of investment contracts to the public.” Describing its service as an educational package for a minimum of P6,000 and as much as P240,000, CROWD1 is offering it to public and soliciting and accepting investments from the public.

To persuade the public to invest, CROWD1 is promising five different bonuses to its investors:

1. Streamline bonus.
2. Binary Pairing bonus.
3. Fear of loss bonus.
4. Matching bonus.
5. Residual bonus.

These bonuses are provided from games and gambling apps. CROWD1 has furthermore trumpeted a pairing incentive payable in euros to encourage member-investors to recruit new members.

Now to symbolize itself as a digital marketing business, CROWD1 claims to generate its income from online games and facilities generation by its residual income members from its affiliated gaming companies such as AFFIGLO and MIGGSTER.

The SEC ruled that CROWD1’s scheme involved the sale and/or offer of securities in the form of investment contracts and, thus, required a secondary license under Republic Act No. 8799, or The Securities Regulation Code (SRC).

The Commission also ruled that the act of CROWD1 of publishing and making presentations on its investment/ business scheme through its website, Facebook, YouTube, and on-ground events, and inviting investors constituted a public offering as defined under Rule 3.1.17 of the 2015 IRR of the SRC.
Section 8 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 SEC.

CROWD1 hasn’t obtained a secondary license to operate as a broker/dealer registered as an issuer of mutual funds, exchange-traded funds or proprietary/ nonproprietary shares, nor registered any securities pursuant to the SRC. CROWD1 only enrolled as a corporation for the major objective of engaging in business process outsourcing services.

The SEC accentuated that the certificate of incorporation granted to CROWD1 explicitly forbade the corporation from pleading for, receiving, or taking investments or placements from the public as well as from issuing investment agreements.

Therefore, the Commission has directed CROWD1 to cease and desist, under the pain of contempt, from enthralling in activities of selling and/or offering for sale securities in the configuration of investment contracts or other similar schemes without prior registration and permit to sell.

The SEC also called CROWD1 to cease from expanding its investment scheme in social media and other online platforms.

Likewise, the Commission restricted CROWD1 from transacting any business involved funds in its depository banks, and from transmitting, unloading, or disseminating in any manner all related assets for the benefit of the investors.

The cease and the order covers the following:

1. The corporation’s operators,
2. Partners
3. Directors
4. Officers
5. Salespersons
6. Agents
7. Representatives
8. Advocates
9. Conduit commodities and subsidiaries alleging and acting for and on its behalf.

In its Motion to Lift, CROWD1 in defense argues that its operations were limited to business processing, with affiliates marketing products and shares in the earnings of the organization. It also argued that the educational packages it was selling to the public were allowed since its objective is to educate the affiliates of the organization on possible wealth to be gained from marketing products and services.

The SEC, however, upheld the evidence presented by the Enforcement and Investor Protection Department (EIPD) stating CROWD1, its officers, agents, and representatives were soliciting investments by attracting people to avail of its educational packages and volunteer more investors to receive commissions.

The Commission noted: “As correctly pointed out by the EIPD, people avail of the so-called educational packages for the purpose of securing for themselves the guaranteed high yields promised by CROWD1. Thus, we agree with the EIPD that the marketing of CROWD1’s investment products is actually a public sale and/or offering of securities in the form of investment contracts. We also agree with the EIPD that CROWD1 acts as a conduit of funds. CROWD1’s allegation that it is not authorized to market nor receive payments from investors is belied by the receipts it issued to the investors which are under the name of a corporation that owns 40% of CROWD1.”

The SEC also found a violation of Section 44 of Republic Act No. 11232 or the revised corporation code of the Philippines by CROWD1’s investment taking-activities beyond the authority it was granted.

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Crowd1 Permanently Banned In Philippines After Denial To Their Motion

Philippines SEC has denied the Crowd1’s appeal. Immediately after that, it was permanently banned in Philippines. The SEC revealed that the a motion was filed by Crowd1 to lift the cease and desist order issued against it.
The Cease and desist was issued to Crowd1 in April. Later, company’s motion was filed in late June.

Then the motion to lift was denied on 2nd July with a claim from SEC stating that Crowd1 wasn’t able to provide an apt evidence in support of their claim that they are not engaged in any form of sale or offer of sale for securities in form of investment contracts.

Whereas in defense, Crowd1 argued that their educational packages sold by it were allowed earlier to the public as their objective was to educate the people about the wealth they can gain from marketing products and services.
Continued promotion of Crowd1 in the Philippines runs the risk of a 5 million PHP (~$415,000 USD) fine, or a twenty-one year prison sentence.

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MyDailyChoice Appoints Vivian Chung-Patterson As Senior Vice President Of Marketing

Vivian Chung-Patterson has been appointed as the Senior Vice President of marketing in MyDailyChoice’s Corporate leadership team. She will be looking after the marketing initiatives and brand development for all the brands of MyDailyChoice.

Vivian has an experience of 10+years in the Network Marketing industry. She has formulated and enforced many successful marketing campaigns resulting in exponentially. She even grew sales from $82 million to $1.5 billion in notable period of five years.

MyDailyChoice is expecting to continue its rapid market expansion and launch of new products in 2020, with Vivian leading the marketing strategy.

Ceo of MyDailyChoice, Josh Zwagil says Vivian will bring an incredible amount of expertise and experience to MDC. He is confident MyDailyChoice will go to the next level with her as part of the executive team. Vivian leads team remarkably during rapid growth periods.

Vivian says she is very excited to join the MyDailyChoice corporate team. With their vision of expansion of product lines and entry in new international markets, she is looking forward to use her expertise to implement strategic marketing campaigns and increase overall sales while supporting the affiliates with effective sales tools.