SEC intervenes to close down Ecomamoni and cancels registration for illegal investment scheme

The recent decision by the Securities and Exchange Commission (SEC) to revoke the corporate registration of Ecomamoni Environmental Recyclable Materials Manufacturing Inc. highlights the importance of adhering to regulations when soliciting investments from the public. The SEC took action against Ecomamoni for violating key laws such as the Revised Corporation Code (RCC), the Securities Regulation Code (SRC), and the Financial Products and Services Consumer Protection Act (FCPA).

Ecomamoni faced severe consequences as a result of its actions. The SEC’s enforcement and investor protection department canceled the company’s certificate of incorporation for unlawfully offering securities to the public without the required registration and license from the Commission. In addition to losing its corporate registration, Ecomamoni was fined ₱1 million for its illegal activities. The company and its incorporators were also ordered to pay the same amount as administrative sanctions under the SRC.

The RCC explicitly prohibits corporations from exercising corporate powers beyond what is granted by law or their articles of incorporation (AoI). Similarly, the SRC strictly prohibits the sale or offering of securities without the necessary registration approved by the Commission. Furthermore, individuals engaged in the buying and selling of securities must be registered with the SEC. Ecomamoni disregarded these regulations by enticing the public to invest in its recycling plans, promising profits in exchange for participation fees.

Despite earlier warnings from the SEC in November 2024 cautioning the public to steer clear of Ecomamoni’s activities due to its lack of registration and authorization to offer securities, the company continued to operate. Ecomamoni only registered as a corporation with the SEC in December 2024, with the stated purpose of manufacturing recyclable materials and converting waste to energy. However, this registration did not grant the company the authority to solicit investments from the public, a fact reiterated by the SEC.

Furthermore, the SEC discovered that Ecomamoni presented its SEC registration certificate to bolster the credibility of its operations to potential investors. The company introduced new schemes with varying participation fees ranging from ₱600 to ₱165,000, offering daily earnings of up to ₱7,000. The SEC deemed Ecomamoni’s practices as akin to a Ponzi scheme, where returns to investors are sourced from new investments rather than legitimate business operations.

By soliciting investments without the necessary license, Ecomamoni engaged in fraudulent activities prohibited by the FCPA. This case serves as a stark reminder of the crucial role played by regulatory bodies like the SEC in protecting the public from fraudulent schemes and maintaining the integrity of the financial market. Companies must ensure compliance with laws and regulations when offering securities to the public to avoid facing similar consequences.