ADA FARM AGRI VENTURES

PICC Secretariat Bldg., Roxas Blvd., Pasay City Securities and Exchange Commission Department of Finance Republic of the Philippines COMMISSION EN BANC In the Matter of: ADA FARM AGRI VENTURES SEC CD0 Case No. 06-19-049 (EIPD), ENFORCEMENT PROTECTION AND DEPARTMENT INVESTOR Movant. CEASE AND DESIST ORDER investments and sale of securities in the form of investment contracts. filed on June 3, 2019 by the Enforcement and Investor Protection Department officers, representatives, salesmen, agents and any and all persons claiming and acting for and in its behalf, from any unauthorized public solicitation of (EIPD) praying to enjoin ADA FARM AGRI VENTURES (ADA FARM) and it's This resolves the Motion for Issuance of a Cease and Desist Order (Motion) issued by the Company Registration and Monitoring Department (CRMD)1, ADA FARM is not registered with the Commission either as a corporation or partnership. Based on the records of the Commission as stated in the Certification representing ADA FARM are enticing the public to invest in said entity. Message: facility that individuals. or group of individuals or persons information received by this Commission from emails and through the SEC i- The investigation against respondent ADA FARM stemmed from ADA FARM entices the public to invest by purchasing a minimum of ten (10) chicks worth Php500.00 with a guaranteed profit of eighty percent (80%) in sixty (60) days. Information gathered by the Commission through the EIPD shows that on the activities of respondent ADA FARM 2. On 31 May 2019, an ADVISORY was posted on the Commission's website 3 June 2019 Certification issued by the Company Registration and Monitoring Department. ADVIS0RY on ADA FARM AGRI VENTURES posted on the Commission's website dated May 31, 2019. On 3 June 2019, a Certification was issued by the Corporate Governance and Finance Department3 (CGFD) stating that based on the records on file with the Commission, ADA FARM AGRI VENTURES is not a registered issuer of mutual funds, exchange traded funds and proprietary/non-proprietary shares or membership certificates and timeshares pursuant to Sections 8 and 12 of the Securities Regulation Code and therefore not licensed to offer and sell such Securities to the public. Department (MSRD) likewise issued a Certification4 stating that per records of file with the MSRD, ADA FARM AGRI VENTURES has not registered any securities pursuant to Sections 8 and 12 of the Securities Regulation Code On even date, the Commission's Markets and Securities Regulation ADA FARM AGRI VENTURES. Further, said entity has not filed nor has any (SRC). Likewise, the MSRD has not issued Permit to Sell Securities in favor of pending application for registration/permit to sell securities. The.EIPD thus found sufficient evidence showing that ADA FARM is soliciting investments from the public employing what is commonly known as a Ponzi scheme in its investment scheme. We find the Motion meritorious. FARM is engaged in the offer and/or sale of securities to the public in the form of investment contracts without the necessary license from the Commission. EIPD's Motion as supported by substantial evidence, shows that ADA Securities are "shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether written or electronic in character" and includes an "investment contract". In a line of cases, it has been stated that an "investment contract" is a the Commission, must be proved to be (1) an investment of money; (2) in a common enterprise; (3) with expectation of profits; and (4) primarily from investment contract in our jurisdiction, to be a security subject to regulation by money; (2) in a common enterprise; (3) with the expectation of profits; and (4) to be derived solely from the efforts of others.5 This definition has been adopted by the Supreme Court of the Philippines which succinctly stated that an efforts of others.6 transaction, contract, or scheme whereby a person: (1) makes an investment of As aptly elucidated by the EIPD, it was able to show that the investment Power Homes Unlimited Corporation v. Securities and Exchange Commission G.R. No. 164182, February 26, 2008. Securities and Exchange Commission v. W.J. Howey Co 328 U.S. 293, 66 S. Ct. 1100, 90 L.Ed. 1224, 163 A.L.R. 1043 (1946) 3 June 2019 Certification issued by the Markets and Securities Regulation Department. 3 June 2019 Certification issued by the Corporate Governance and Finance Department. 2 scheme of respondent ADA FARM falls within the ambit of an investment contract because of its essential features, as follows: 1 The investor enters into a contract. There is a placement of money where for a certain sum the investors are guaranteed a profit of eighty percent (80%) return in sixty (60) days. (2) The money invested is placed in a common enterprise and the investor-member expects to derive profits. (3) Finally, the member-investor expects to earn profits from the entrepreneurial and managerial efforts of others. The investor need not do anything but go to the office of ADA FARM and receive the guaranteed return to them. The investors just have to invest money. investment contract, the provisions of Section 8.1 of the SRC should be Having established that the investment scheme of ADA FARM is an complied with before said securities could be offered or sold to the public. to the general public sans the necessary license or permit as attested by the Thus, ADA FARM has engaged itself in offering or selling such securities Market Securities Regulation Department (MSRD) and Corporate Governance and Finance Department (CGFD) of this Commission. Further, the investment scheme of ADA FARM has the characteristics of a Ponzi scheme as it promises an exorbitant rate of return with little or no risk at all to investors as exemplified in the case of People of the Philippines vs. Palmy Tibayan and Rico Z. Puerto (G.R. Nos. 209655-60, January 14, 2015), where the Supreme Court held that: investment fraud -that involves the payment of "To be sure, a Ponzi scheme is a type of purported returns to existing investors from funds contributed by new investors. Its organizers_often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the perpetratorsfocus on.attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting_from a legitimate business. It is not an investment strategy but a gullibility scheme, which works only as long as there is an ever increasing number of new investors joining the scheme. It is difficult to sustain the scheme over a long period of time because the operator needs an ever larger pool of 3 later investors to continue paying the promised profits is that the "con-man" collects his money from his to early investors. The idea behind this type of swindle second or third round of investors and then absconds before anyone else shows up to collect. Necessarily Ponzi schemes only last weeks, or months at the most. (Underscoring added for emphasis) FARM is engaged in offering for sale securities to the public through indiscriminate or random offering online7 promoting its investment scheme to potential investors without prior registration. Thus, Section 64 of the Securities The EIPD adduced sufficient evidence to support its allegations that ADA Regulation Code would apply, to wit: SEC. 64. Cease and Desist Order. - 64.1. The motu proprio, or upon verified complaint by any Commission, after proper investigation or verification, aggrieved party, may issue a cease and desist order without the necessity of :a prior hearing if in its judgment the act or practice, unless restrained, will cause grave or irreparable injury or prejudice to the operate as a fraud on investors or is otherwise likely to investing public. public. Thus, it is necessary that a Cease and Desist Order be issued to enjoin The Commission is duty-bound to protect the interest of the investing ADA FARM from further offering and selling unregistered securities to the public. Otherwise, to allow ADA FARM to continue soliciting investments license or permit will operate as a fraud on investors or is likely to cause grave and/or selling or offering for sale securities to the public without the necessary or irreparable injury or prejudice e to the investing public.8 FARM should be immediately restrained to prevent any further grave injury or Hence, the selling or offering for sale of securities by the respondent ADA prejudice to the investing public. Likewise, it is imperative that a Cease and Desist Order be issued as the continued public offering and sale of such securities without the required license from the Commission makes the public offering and selling a continuing illegal act. ITS ALLIED ENTITIES, their partners, officers, agents, representatives, conduits, assigns and ANY AND ALL PERSONS CLAIMING AND ACTING FOR WHEREFORE, premises considered, ADA FARM AGRI VENTURES AND 7 Under Rule 3.1.17.4 of the 2015 SRC Rules, any offering, solicitation and presentation of securities for sale In the matter of Boracay Transpacific Properties Inc. & Paradisya Land Inc., SEC CD0 Case No. 07-14-01 to the public through information communication technology, such as internet, shall be presumed to be a February 26, 2015. public offering AND IN THEIR BEHALF are hereby ordered to IMMEDIATELY CEASE AND DESIST UNDER PAIN OF CONTEMPT, from engaging in activities of selling and/or offering for sale securities in the form of investment contracts or any other forms of the same nature, as discussed above. from promoting its investment scheme through the internet and/or delete or Furthermore, the subject entities and individuals are directed to CEASE from the websites. remove immediately the promotional presentation of'such investment scheme to ensure the preservation of the assets for the benefit of the investors. Moreover, to forestall grave damage and prejudice to all concerned and manner any and all assets, properties, real or personal, and including bank ENJOINED from a) transacting any and all business involving the funds in its depository banks, and b) from transferring, disposing or conveying in any other respondents or any of their representatives, or any person/s acting for and in their behalf, and such other persons directing or controlling the activities of such corporation, officers, representatives, salesmen and agents, are all deposits, if any, of which the named persons herein may have any interest, claim or participation whatsoever, whether directly or indirectly, under their Commission. custody, immediately upon receipt of this Order, until further orders from this Commission's Extension Offices having jurisdiction over the area where the principal office of the subject of this Cease and Desist Order is located, are The Enforcement and Investor Protection Department and/or the ITS ALLIED ENTITIES, its General Manager, In-House Counsel or partners; and if anY, of ADA FARM AGRI VENTURES AND ITS ALLIED ENTITIES. 2) post copies of the Order at the entrance of the main office and/or branches, hereby directed to: (1) serve this Order to ADA FARM AGRI VENTURES AND Department for their information and appropriate action. and Finance Department and the Economic Research and Information Company Registration and Monitoring Department, the Corporate Governance published in a national newspaper of general circulation and furnished to the Let a copy of this Order be also posted in the Commission's website, to the Commission En Banc within ten (10) days from receipt of this Cease and are further directed to submit a formal compliance report, by way of a pleading. Desist Order. The EIPD and/or the Extension Office who served and posted this order 2016 Rules of Procedure of the Commission, the parties subject of this Cease and Desist Order may file a request for the lifting thereof within five (5) days from receipt hereof. In accordance with the provisions of Sec. 64.3 of SRC and Sec. 4-3 of the FAIL NOT UNDER PENALTY OF LAW SO ORDERED Pasay City, Philippines, 04 June 2019 EMILIO B.AQUINO WMA Chaiyperson PA 3a Jkra ANTONIETA F. IBE EPHYRO LUIS B. AMATONG Commissioner Commissioner JAVEY PAUL D. FRANCISCO Commissioner Commissioner KELVIN LESTER K.LEE * On Leave 6