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Manila Bulletin devider Business devider SEC orders AA Castro to stop illegal investment scheme

SEC orders AA Castro to stop illegal investment scheme

Published Sep 4, 2022 07:00 pm

AA Castro Construction and Aggregates Trading has been ordered by the Securities and Exchange Commission (SEC) to stop offering and selling investments to the public in the guise of a construction business.

The Commission En Banc directed the company, together with AA Castro Hauling Construction Management and Aggregates Trading OPC (ACHCMATO) and its Chief Executive Officer April Grace Calleja Castro, to immediately cease and desist from further engaging in the unlawful solicitation, offer, and/or sale of securities in the form of investment contracts without the necessary license from the SEC.

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The order also covers its representatives, salesmen, solicitors, agents, uplines, enablers, and influencers.

The company and its officers have likewise been ordered to cease their internet presence relating to their investment scheme.

They were further prohibited from transacting any business involving funds in its depository banks, and from transferring, disposing, or conveying any related assets to ensure the preservation of the assets of the investors.

The order was issued after the SEC Enforcement and Investor Protection Department (EIPD) found that AA Castro has been enticing the public to invest in its supposed construction business through public events, as well as through social media sites Facebook and YouTube.

AA Castro has promised the public around 30 percent to 40 percent returns every month for a minimum investment of P50,000.

Payouts amounting to P4,400 to P4,700 were to be given weekly, taken from its supposed construction business that allegedly yielded P23.26 per 189 cubic meters of aggregates hauled.

The scheme involves the sale and offer of securities to the public in the form of investment contracts, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the SEC.

The Securities Regulation Code (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.

“It is clear that AA Castro and April Castro are not authorized to sell or offer investment contracts to the public without the requisite license from this Commission,” the Commission En Banc held.

It added that, “This undoubtedly warrants the issuance of a cease and desist order because the act of AA Castro and April Castro in selling/offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public.”

AA Castro is not registered with the Commission either as a corporation or as a partnership. Meanwhile, ACHCMATO is a duly registered corporation with the SEC, but has never secured a secondary license as issuer of securities or broker dealer nor registered any securities for public offering pursuant to the SRC.

The Commission En Banc also noted that ACHCMATO’s registration papers showed that the company only had P3 million in capitalization, which would not be enough to sustain its promised payouts to the public.

“Pay-outs for investors are financed from investments of new recruits/investors. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public,” the order read.

The SEC has issued an advisory warning the public not to invest in AA Castro as early as July 26, 2022.

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