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CA upholds order issued by SEC against AlphanetWorld

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The Court of Appeals (CA) upheld the cease-and-desist order (CDO) issued by the Securities and Exchange Commission (SEC) against AlphanetWorld Corp.

The SEC in 2022 issued CDO against AlphanetWorld, which was doing business under the name and style of NWorld, allegedly for illegal solicitation of investments from the public without the necessary license.

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The CA 8th Division, in an 11-page decision promulgated on Dec. 27, 2024, held that the SEC provided NWorld with due process in issuing the CDO and the company was involved in offering investments to the public without registration and necessary licenses from the SEC.

Based on investigation conducted by SEC’s Enforcement and Investor Protection Department, NWorld was found to be involved in the selling of investment packages ranging from P4,750 to P19,000, with a guaranteed return of up to P127,000 per month.

Its investors were allegedly entitled to bonuses such as discounted rates for every purchase of investment packages, referral bonus, sales match bonus and potential earning of P25,000 under NWorld’s “XX Cash” program whenever they meet the required pairs of recruits.

The offering of NWorld involved investment contracts, which is a form of securities as defined under Section 3 of Republic Act (RA) No. 8799, or the Securities Regulation Code (SRC), the SEC said.

The SRC prohibits the sale or distribution of securities without a registration statement duly filed with and approved by the SEC.

“Undoubtedly, [NWorld’s] business operation or scheme constitutes an investment contract that is a security under R.A. No. 8799. Hence, it must be registered with SEC before its sale or offer for sale or distribution in order to protect the investing public from fraudulent securities,” the CA ruled.

“The strict regulation of securities is founded on the premise that the capital markets depend on the investing public’s level of confidence in the system. As [NWorld] failed to register the same, its offering or sale to the public was rightfully enjoined by SEC,” the appellate court said.

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