President Duterte has signed into law a measure imposing heavy penalties against investment fraud.
PRESIDENT RODRIGO DUTERTE — The President has signed into law a measure penalizing individuals found guilty of investment fraud with as much as PHP 10 million fine or significant years of jail time or both.
The new penalties are provided under the Financial Products and Services Consumer Protection Act (Republic Act No. 11765) which defines investment fraud as any form of deceptive solicitation of investments from the public.
Under the law, investment fraud covers “Ponzi” schemes and other schemes involving the promise or offer of profits or returns that are sourced from the contributions or investments made by the investors themselves.
It also covers boiler room operations and the selling/offering of investment schemes to the public without a license or a permit from SEC (Securities and Exchange Commission).
Financial service or product, on the other hand, refers to services or products developed or marketed by a financial service provider which may include — but are not limited to — deposits, savings, insurance, credit, securities, investments, pre-need and health maintenance organization products, payments, remittances, and other similar services and products.
This also includes digital financial services or products which pertain to the broad range of financial services accessed and delivered via digital channels.
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Under the new law signed on May 6, any individual found guilty of committing investment fraud will face a jail time of 1-5 years or face a PHP 50,000 to PHP 2 million fine or both.
In the event that such violation is committed by a juridical entity or a corporation, the directors, officers, employees, or other officers who are directly responsible, those aforementioned units and individuals will face the same penalties.
“If the financial regulators obtain a civil penalty against any person or entity in any of such proceedings or such person or entity agrees to settle such civil penalty, the amount of such civil penalty shall, on the motion of the financial regulators, be added to and become part of a disgorgement fund or other fund established for the benefit of the aggrieved financial consumer,” the law states.
Financial regulators have been tasked to provide guidelines on implementing the new law within 1 year from its effectivity. You may visit HERE for more information about the new law.
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