LMB FOOTBALL

Securities and Exchange Commission COMMISSION EN BANC Republic of the Philippines Department of Finance IN THE MATTER OF: LMB FOOTBALL SEC CD0 Case No. 03-22-086 PROTECTION DEPARTMENT (EIPD), ENFORCEMENT AND INVESTOR Movant. 4 CEASE AND DESIST ORDER behalf, from selling, encumbering, conveying, or disposing any of its properties and/or assets without the prior written authority from the Commission. representatives, salesmen, agents, investment team planners, mentors, its internet presence relating to its investment activities until the requisite registration statements are filed with and approved by the Securities and Exchange Commission (the "Commission") and the license to offer/sell securities is issued; and (b) prohibiting LMB Football, its Agents, and any and all persons claiming and/or acting for and in their for and in their behalf, to immediately cease and desist from further engaging in the sale and/or offer of unregistered securities, and to cease Department (EIPD) praying that an order be issued (a) directing LMB Football, itsofficers, enablers, influencers, assigns, conduit entities, subsidiaries (collectively referred to as "Agents"), and any and all persons claiming and/or acting (the "Motion") filed by the Enforcement and Investor Protection This resolves the Motion for Issuance of a Cease and Desist Orderi operators, administrators, promoters PARTIES against persons and entities engaged in the sale and/or offer of unregistered securities without the requisite secondary license.2 tasked, among others, to investigate and institute administrative actions The EIPD is one of the Commission's operating departments Commission either as a corporation or partnership, which operates an online investment-solicitation business, and is not authorized to solicit LMB Football is an entity that is not registered with the 2 Section 2-2(c)(1-c), Rule II, Part I of the 2016 SEC Rules. 1 Filed on 14 March 2022. SECOG CERTIFIED TRUE COPY OF THE DOCUMENTS ON RECORD ?AGH v PACES Y SEC CD0 Case No. 03-22-086 Cease and Desist Order LMB FOOTBALI In the Matter Page 2 of 12 an entity registered with the Commission and the Department of Trade and Industry (DTI).4 Regulation Code (SRC).3 LMB Football however openly represents to be from the Commission as prescribed under Section 8.1 of the Securities investments from the public as it has not secured the requisite license RELEVANT FACTS and other laws, rules and regulations administered and implemented by the Commission. the public on the legitimacy of LMB Football, the EIPD conducted a formal investigation on the operations and activities of LMB Football carried out using the internet and its social media platform/accountss, for possible violation(s) of the SRC, the Revised Corporation Code (RCC). Acting on the numerous email reports and inquiries received from which guarantees "zero loss".6 The foregoing is allegedly attributed to LMB Football's recommended team plan which is a product/result of a 4- compensation for all losses incurred relating to football matches that are purchased from it which is based on the recommended/available team plan.7 business operations, LMB Football uses and maintains a website, https://lmb9999.com and a Facebook page where it presents and year historical data analysis conducted by LMB Football that assures promotes itself as a "reverse betting platform" for football match results 100% stability. Hence, LMB Football guarantees its investors a 100% The EIPD presented evidence showing that in the conduct of its receive 20% bonus upon joining and an additional commission to those who are able to recruit new investors. LMB Football is also offering First Deposit Bonus and VIP Privilege Super Benefits by promising an extra interest (or 90% in 30 days) with full capital protection.8 To convince the public that LMB Footbal is carrying out a legitimate betting operations, it football games which gives investors eighteen (18) score-betting options from 0-0 to 3-3, with a winning probability ratio of 17/18 or success rate of 95%. Moroever, LMB Football also offers investors the opportunity to represents to the public that the investment scheme involves actual Football entices the public to make a one time investment of as low as PhP300.00 which entitiles the investor to a 3% daily compounding Using the tagline "Invest and let your money work for you!", LMB 4 Annex "T" of the Motion 6 Par. 7 of the Motion; see also Annex " A" of the Motion : Annex "K-2" of the Motion 3 Company Registration and Monitoring Department's Certification dated 4 February 2022. 5 Annex "B" of the Motion. 7 Par. 9 of the Motion CERTIFIED TRUE COPY OP SEC: OG THE DOCUMENT'S ON RECORD AG IV SEC CDO Case No. 03-22-086 Cease and Desist Order In the Matter of. LMB FOOTBALL Page 3 of 12 income ranging from one percent to eighty percent (1% - 80%) beginning at VIP 1 up to VIP10.9 social media platforms of its Agents are as follows: LMB's investment plan,10 as published in its website and in the VIP 10 VIP 7 VIP 8 VIP 9 VIP 5 VIP 6 VIP 3 VIP 4 Level VIP 1 VIP 2 P100,000,000.00 200,000.00 R50,000,000.00 50,000.00 3,000,000.00 P10,000,000.00 P1,000,000.00 Quantity P300.00 #10,000.00 P3,000.00 80% 4% 6% 8% 10% 30% 40% 20% Income 1% 2% Extra (12) months given a minimum investment of PhP300.00,11 to wit: media platforms of its Agents, the sample computation of the compounding interests that investors will earn over a period of twelve LMB Football also made available in its website and in the social 11th month 12th month 10th month 2nd month 7th month 8th month 9th month 4th month 6th month 3rd month 5th month 1st month Time Capital (PhP) 2,327,021.20 5,817,739.97 958,701.92 383,468.45 153,382.45 25,275.80 10,413.30 63,191.54 Start-up 1,820.51 4,165.18 728.18 300 Monthly Profit 3,303,441.93 3,490,718.77 1,368,319.28 230,086.00 575,233.48 37,915.74 90,190.91 14,862.51 1,092.33 2,344.68 6,248.11 428.18 (PhP) 14,121,181.90 Balance (PhP) Accumulated 2,327,021.20 5,817,739.97 958.701.92 153,382.45 383.468.45 25,275.80 63,191.54 10,413.30 4,165.18 1,820.51 728.18 LMB Football publicly announced/claimed that its business is a success EIPD then presented evidence showing that on the basis thereof, " Annex "J-5" of the Motion. 11 Annex "K-2" of the Motion. I0 Ibid. PACE THE DOCUMENTS ON RECORD CERTIFIFD TRUE COPY OR 3 SEC V PAGY K SEC CDO Case No. 03-22-086 Cease and Desist Orde In the Matter of: LMB FOOTBALL Page 4 of 12 management aspect of soccer game, rather than on gambling.12 Football attributed such success to its act of revolutionizing betting and offering a tool for people to invest, by focusing on the financial with its membership exceeding 30,000,000. Relative thereto, LMB In relation to the process of investing in LMB Football, the EIPD that were gathered in the course of its investigation,13 to wit: provided a summary thereof based on the information and documents a The prospective investor will be given a link or referral https://Imb9999.com; code to gain access to LMB Football's website at b. The investor shall then proceed to create an account and will be re-directed to the main dashboard; C The investor is thereafter required to deposit his chosen amount to LMB Football's UnionBank account using GCash; and d. The investor uploads a screenshot of the payment as proof of deposit and submits the same to LMBF Industry (DTI) stamped therein.14 made and actually used a spurious SEc Certificate of Incorporation with number AS92037135 with a dry seal of the Department of Trade and The EIPD also submitted evidence showing that LMB Football advised to exercise caution in dealing with individuals or group of informing and warning the public that LMB Football is not authorized to persons soliciting investments or recruiting investors for and on behalf solicit investments nor issue securities as defined under the law as it does not have a secondary license from the Commission. The public was also of LMBF. On 3 .February 2022, the Commission issued an Advisory15 rebranded itself as "LMB Charity" to make it appear to the public that the profits of its investment-solicitation activities are used to help people through charitable projects.16 As a consequence of the issuance of the Advisory, LMB Football 16 Page 8 of the Motion. 14 Annex "T" of the Motion. 12 Par. 10 (Annex "D") of the Motion 13 Annex "E" of the Motion. I5 Annex "G" of the Motion. CERTIEIED TRUE COPY S Oe 1111 UMEntS On RECOrE M SEC CD0 Case No. 03-22-086 Cease and Desist Order LMB FOOTBALI In the Matter of. Page 5 of 12 pursuant to Sections 8 and 12 of the SRC, or of mutual funds, including Securities Regulation Department (MSRD) of the Commission showing that it has not applied for a primary franchise as a corporation or partnership, has not been issued any secondary license to operate as a exchange traded funds, membership certificates, and time shares. EIPD presented in evidence the Certifications17 issued by the Company Registration and Monitoring Department (CRMD), the Corporate Governance and Finance Department (CGFD) and the Markets and broker/dealer of securities, and is not a registered issuer of any securities corporation or partnership, and has no license to sell/offer securities, the In support of its allegation that LMB Football is not a registered LMBF continuously operates and conducts investment taking and solicitation activities.18 Notwithstanding the issuance of the Advisory, the EIPD found that Hence, the instant Motion. ISSUE Football is warranted based on the findings and evidence presented by the EIPD. Whether the issuance of a cease and desist order against LMB RULING the same. The Commission finds the Motion meritorious and hereby grants corporation, is offering and/or selling unregistered securities in the form of investment contracts to the public without the requisite license from the Commission, in violation of Section of the SRC and Rule 3.1.17 of the SRC-IRR. able to establish that LMB Football, an entity that is not registered as a The EIPD's Motion which is supported by substantial evidence was Section 3 of the SRC defines "securities" as follows: "SEC. 3. Definition of Terms. - 3.1. "Securities" are shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture 17 Annexes F to F-2 of the Motion. 18 Annex "H" of the Motion. CERTIFIEDTRUE COPY OI S(* OG THE DOCUMENTS ON RECORD PAGE 5 IV 3 SEC CDO Case No. 03-22-086 Cease and Desist Orde In the Matter of. LMB FOOTBALL Page 6 of 12 and evidenced by a certificate, contract, instrument, whether written or electronic in character. It includes: X X X profit sharing agreement, certificates of deposit for a future subscription;" (Emphasis supplied) (b) Investment contracts, certificates of interest or participation in a An "investment contract" is defined as follows: is led to expect profits primarily from the efforts of others. It is property of others on the promise of profits. whereby a person invests his money in a common enterprise and presumed to exist whenever a person seeks to use the money or "An investment contract means a contract, transaction or scheme even if the promoter receives nothing more than a broker's commission."19 (Emphasis supplied) A common enterprise is deemed created when two (2) or more investors "pool" their resources, creating a common enterprise, securities that are required to be registered with the Commission for the protection of the investing public, to wit: Commission,2o the Supreme Court ruled that investment contracts are In the case of Power Homes Unlimited v. Securities and Exchange markets depend on the investing public's level of confidence in the be registered with public respondent SEC, otherwise the SEC cannot protect the investing public from fraudulent securities. The strict regulation of securities is founded on the premise that the capital System." "As an investment contract that is security under R.A. No. 8799, it must scheme whereby a person (1) makes an investment of money, (2) in a solely from the efforts of others. Investment contracts have been used and adopted in various situations where individuals were led to invest money in a common enterprise with the expectation that they would earn American origin. It traces its roots from the US Supreme Court case Securities and Exchange Commission v. W.J. Howey Co.21 where the common enterprise, (3) with the expectation of profits, (4) to be derived Court stated that an investment contract is a transaction, contract, or The concept of an investment contract in the Philippines is of 21 328 U.S. 293, 66 S. Ct. 1100, 90 L. Ed. 1244, 163 A.L.R. 1043 (1946). 20 Note 24, Supra 19 Rule 26.3.5 of the Implementing Rules and Regulations of the SRC THE DOCUMENtS On REGORD CERTIFIED TRUE COPY O SE OC tv SEC CDO Case No. 03-22-086 Cease andDesistOrde LMB FOOTBALL In the Matter of: Page 7 of 12 themselves.22 a profit through the efforts of the promoter or of someone other than efforts of others. Under this definition, whenever an investor relinquishes purpose of deriving profits from them, he or she is in fact investing in a common enterprise; (3) with expectation of profits, (4) primarily from control over his or her funds and submits their control to another for the Commission,23 where the Supreme Court ruled that an investment Commission, must be proved to be (1) an investment of money; (2) in a security.24 used in Power Homes Unlimited Corporation v. Securities and Exchange contract in our jurisdiction, to be a security subject to regulation by the The concept of an investment contract was thereafter adopted and that LMBF is unlawfully engaged in the sale and/or offer of securities in the form of investment contract, as it has no license to carry out the same. Applying the foregoing to the instant case, this Commission finds handed to the latter their one-time investment of Three Hundred Pesos (P300.00); First, the 300 Million investors claimed by LMB Football means by which LMB Football will be able to sustain its operations and fulfill its promise to pay its investors the guaranteed returns. is a revolutionary tool that allows people to invest, by focusing on the financial management aspect of soccer game, rather than on gambling. This scheme obviously involves the which is used to pay the guaranteed returns of its existing investors, and intended to ensure the continued operation of the entity. The sale of this investment scheme is the only pooling of resources consisting of the investors' moneys Second, LMB Football admitted that its investment scheme Third, LMB Football's investors expect to earn guaranteed returns in an amount ranging from 3%-8% daily or 90%- 240% in 30 days plus commissions and bonuses. anything after paying their one-time investment of Fourth, LMB Football's investors are not expected to do to be solely through the efforts of another party, Rule 26.3 of the 2015 IRR of the SRC replaced the qualifier 24 Investment Co. Institute v. Camp, 274 F. Supp. 624 (D. D.C. 1967). 22 Ibid. Although the definition as stated in the Howey Case qualified that the earning of profit was expected with "primarily ", acknowledging that an investment contract may still be present where the individual who placed the money exerted a small amount of effort in an attempt to earn the profits 23 G.R. No. 164182, 26 February 2008 Se( OC CERTUEIED TRUE COPY O! The UMENTS ON RECORL PAG SEC CD0 Case No. 03-22-086 Cease and Desist Order LMB FOOTBALL In the Matter of. Page 8 of 12 its continuity. Consequently, the reverse betting platform PhP300.00. LMB Football and/or its Agents primarily carry that LMB Football claims to operate is a sham as its investors don't even need to submit their chosen team plan(s). out the sale and promotion of the investment plans to ensure same are not registered with the Commission in the form of an approved securities cannot be sold or offered for sale within the Philippines if the Registration Statement and a Permit to Offer/Sell issued in favor of the applicant, to wit: Relative thereto, Section 8.1 of the SRC categorically provides that approved by the Commission. Prior such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser.' (Emphasis and underscoring supplied) shall not be sold or offered for sale or distribution within the Philippines. without a registration statement duly filed with and "SEC. 8. Requirement of Registration of Securities. - 8.1 Securities a corporation with the Commission. that LMB Football is unlawfully engaged in the sale and/or offer of unregistered securities in the form of investment contract, because it has no license to carry out the same, aside from the fact it is not registered as Applying the foregoing to the instant case, this Commission finds considering that its business operations and investment-taking activities are actually published online through the social media platforms sans the requisite license. Football's investment scheme involves public offering of securities Moreover, the evidence presented by the EIPD also shows that LMB 2015 IRR of the SRC as follows: Public offering of securities is defined under Rule 3.1.17 of the to anyone, whether solicited or unsolicited. Any solicitation or presentation of securities for sale through any of the following modes shall be presumed to be a public offering: "3.1.17. Public offering is any offering of securities to the public or X X X communication;"25 (Emphasis supplied) 3.1.17.3 Advertisement or announcement in radio, television, telephone, communication electronic technology communications, or any other information forms of 25 Rule 3.1.17 of the Implementing Rules and Regulations of the SRC. CERTIFIED TRUE COPYO Ste ( THE DOCUMENTS ON RECORH v SEC CD0 Case No. 03-22-086 Cease and Desist Order In the Matter of: LMB FOOTBALL Page 9 of 12 Agents are using the website https://Imb9999.com and their respective Facebook accounts to publicly sell and/or offering unregistered securities, without the requisite license from the Commission. This act which clearly violates Rule 3.1.17 of the 2015 IRR of the SRC further justifies the issuance of a CDO. In this case, the evidence clearly shows that LMB Football and its issuance of a CD0, Section 64 of the SRC provides, thus: Finally, relative to the requirements prescribed by law for a valid investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public." (Emphasis supplied) proper investigation or verification, motu proprio or upon verified complaint by any aggrieved party, may issue a cease and desist the act or practice, unless restrained, will operate as a fraud on "Section 64. Cease and Desist Order. -- 64.1. The Commission, after order without the necessity of a prior hearing if in its judgment be validly issued: requisites that must be complied with before a cease and desist order can Under the afore-quoted provision, there are two (2) essential 1 There must be a conduct of a proper investigation or verification; and 2 There must be a finding that the act or practice, unless likely to cause grave or irreparable injury or prejudice to the restrained, will operate as a fraud on investors or is otherwise investing public.26 activities of LMB Football. support of its Motion showing the unauthorized investment solicitation conducted a proper investigation as evidenced by the Affidavit of the EIPD investigating officers and the documents gathered and submitted in Anent the first requisite, the records disclose that the EIPD and calculated to instill in the minds of the investing public that it is carrying out a legitimate business. it appear to the public that it is a legitimate corporation authorized to sell, Certificate of Incorporation was purposely made to defraud the public, Football's (as well as its Agents) willful employment of fraud by making offer and deal with securities. The use by LMB Football of a falsified The second requisite is likewise present as shown by LMB 26 Securities and Exchange Commission vs. Performance Foreign Exhange Corporation,G.R.No154131, July 20, 2006. DC THE DO CERTIFIFD TRUE COPY OE C "UMENTS ON RECORD 1M PAKSt SEC CDO Case No. 03-22-086 Cease and Desist Order LMB FOOTBALL In the Matter of. Page 10 of 12 held that fraud is a generic term that covers any act calculated to deceive, thus: In People of the Philippines vs. Mateo, et al.,27 the Supreme Court conduct, by false or misleading allegations, or by concealment of that which should have been disclosed which deceives or is intended to deceive another so that he shall act upon it to his legal injury." (Emphasis supplied) "Fraud, in its general sense, is deemed to comprise anything advantage over another by false suggestions or by suppression of truth and includes all surprise, trick, cunning, dissembling and any unfair way by which another is cheated. On the other hand, deceit is the false representation of a matter of fact, whether by words or calculated to deceive, including all acts, omissions, and concealment involving a breach of legal or equitable duty, trust, or confidence justly reposed, resulting in damage to another, or by which an undue and] unconscientious advantage is taken of another. It is a generic term embracing all multifarious means which human ingenuity can devise, and which are resorted to by one individual to secure an violation of the SRC that will likely defraud or cause grave or irreparable injury to the investing public, thus: likely cause grave or irreparable injury or prejudice to the investing emphasized the need for a prompt issuance of a CDO after a finding of a securities operates as a fraud to the public which, if unrestrained, will public.28 This finds support in the case of Securities and Exchange Commission vs. CJH Development Corp.29 where the Supreme Court Moreover, the act of LMBF in selling/offering unregistered is obliged to protect. results can only generate further injury to the public that the SEc to issue a cease and desist order that aims to curtail fraud or grave or irreparable injury to investors. There is good reason for this provision, as any delay in the restraint of acts that yield such from a verified complaint from an aggrieved party. A prior hearing is also not required whenever the Commission finds it appropriate "The law is clear on the point that a cease and desist order may be issued by the SEC motu proprio, it being unnecessary that it results The act of selling unregistered securities would necessarily by making it appear that respondents have authority to deal on such securities. Section 8.1 of the SRC clearly states that securities shall not be sold or offered for sale or distribution within the Philippines without a registration statement duly filed with and operate as a fraud on investors as it deceives the investing public 2s Section 64 of the'Securities Regulation Code. 29 (G.R. No. 210316, November 28, 2016) 27 G.R. No. 210612, October 9, 2017. THE DOCUMENTS ON REGOR! CERTIFIED TRUE COPY O S+( D PAG SEC CDO Case No. 03-22-086 Cease and Desist Order In the Matter of. LMB FOOTBALI Page 11 of 12 approved by the SEC and that prior to such sale, information on the securities, in such form and with such substance as the SEC may prescribe, shall be made available to each prospective buyer.' (Emphasis supplied) and so holds that the issuance of a CDO is warranted and is in order. On the basis of the foregoing disquisitions, this Commission finds IMMEDIATELY CEASE AND DESIST from engaging in the until the requisite registration statement is duly filed with and approved by the Commission. investment team planners, mentors, enablers, influencers, assigns, conduit entities, subsidiaries, and any and all persons claiming, acting, and operating for and in their behalf, are hereby ordered to unlawful/unauthorized solicitation, offer and/or sale of securities in the form of investment contracts and/or any other similar or related acts, operators, administrators, promoters, representatives, salesmen, agents, WHEREFORE, premises considered, LMB Football, and its officers, appropriate administrative and criminal action against any persons or entities found to act as solicitors, information providers, salesmen, salesmen, agents and any and all persons claiming and acting for and in this Cease and Desist Order. The Commission will institute the agents, brokers, dealers or the like for and in their behalf their behalf are likewise directed to immediately CEASE their internet presence relating to the transactions and investment scheme covered by LMB Football, its operators, directors, officers, representatives, indirectly, under their custody, to ensure the preservation of the assets or personal, including bank deposits, if any, of which the named persons of the investors operators, directors, officers, representatives, salesmen, agents and any and all persons claiming and acting for and in their behalf from transacting any business involving the funds in its depository banks and/or in any non-bank financial institution, and from transferring disposing, or conveying in any manner, any and all assets, properties, real herein may have interest, claim or participation, whether directly or Finally, the Commission hereby PROHIBITS LMB Football, its provided for under Section 4-2, Rule IV, Part I of the 2016 Rules of Procedure of the SEC. posting of this Cease and Desist Order in the Commission's website, and (b) the publication of the same in a newspaper of general circulation as The EIPD of the Commission is hereby DIRECTED to cause (a) the e QCK THE DOCUMENTS O CERTIFIFD TRUE COPY O RECOR 2 SEC CDO Case No. 03-22-086 Cease and Desist Order In the Matter of. LMB FOOTBALL Page 12 of 12 report, by way of pleading, to the Commission En Banc WITHIN TEN (10) DAYS from receipt of this Cease and Desist Order. The EIPD is FURTHER DIRECTED to submit a formal compliance government unit(s) for their information and appropriate action. and Industry, the National Privacy Commission, the Department of Information and Communications Technology, and the relevant local and Monitoring Department, Market and Securities Regulation Commission, the Bangko Sentral ng Pilipinas, the Department of Trade Department, Corporate Governance and Finance Department and the Information and Communications Technology Department of this Let a copy of this Order be furnished to the Company Registration Respondent may file a verified Motion to Lift the CDO to the Commission Part II, Rule IV, Section 4-3 of the 2016 Rules of Procedure of the SEC, the En Banc thru the Office of the General Counsel, within five (5) days from receipt of this Order. In accordance with the provisions of Section 64.3 of the SRC and FAIL NOT UNDER PENALTY OF LAW SO ORDERED. Pasay City, Philippines; 22 March 2022 EMILIO B.AQUINO Chairperson AV PAUL D. FRANCISCO Commissioner KEWIN LESTER K. LEE Commissioner KARLO S. BELLO Commissioner CJILL BRYANT T. FERNANDEZ Commissioner SES OG PAGE THE DOCUMENTS ON RECORD CERTIFIED TRUE COPY OI N TAGF