SEC orders two beauty firms to stop investment solicitation

THE Securities and Exchange Commission (SEC) has ordered Amari Luxe Wellness OPC and CRF Beauty Within Salon and Spa to stop offering and selling what the regulator determined were unregistered securities to the public. The SEC’s Enforcement and Investor Protection Department issued the cease-and-desist order (CDO) following a motu proprio investigation into the businesses and information received by the commission regarding investment offers promoted through Facebook. According to the order, Amari Luxe Wellness OPC, operating under the trade name Amari Luxe Aesthetic and Wellness Clinic, promoted a co-ownership program through social media. The SEC said CRF Beauty Within Salon and Spa also promoted a partnership arrangement requiring a P50,000 capital contribution in exchange for a stated monthly income of P5,000 for 12 months, equivalent to a 10% monthly return. In its ruling, the commission said the Amari Luxe arrangement promised monthly returns of 10% to 15%, while the CRF Beauty Within offer promised monthly profits of 10%. The SEC said the schemes constituted investment contracts under the Securities Regulation Code (SRC), as investors were placing money in a common enterprise with an expectation of earning profits primarily from the efforts of others. The commission said its records showed that CRF Beauty Within Salon and Spa, Amari Luxe Wellness OPC, and Amari Luxe Aesthetic and Wellness Clinic were not authorized to solicit investments from the public because they had not secured the required registration or license. Under the SRC, securities generally may not be offered or sold in the Philippines without a registration statement filed with and approved by the SEC, subject to exemptions provided by law. The SEC also said the promotion of the investment offers through Facebook constituted a public offering under its rules. The commission further said the schemes had characteristics of a Ponzi scheme, citing the promise of high returns with little or no risk to investors. In making that finding, the SEC cited a Supreme Court description of a Ponzi scheme as an investment fraud in which purported returns to existing investors are paid using funds contributed by new investors. The SEC said continued offering and selling of the securities without the required registration warranted the issuance of the CDO to prevent potential harm, prejudice, or loss to the investing public. Under the order, Amari Luxe Wellness OPC and CRF Beauty Within Salon and Spa, along with their owner, agents, representatives, salesmen, conduit entities, subsidiaries, and persons acting on their behalf, were directed to immediately stop offering or selling the securities cited by the commission. The order also bars transactions involving funds in their depository banks and the transfer or disposal of assets covered by the CDO without SEC authority. The CDO took effect upon service or publication on the SEC’s official channels and will remain in force unless lifted by the commission. The respondents may file a verified motion to lift the order within five days from receipt or posting of the CDO, whichever is earlier. — Alexandria Grace C. Magno