The Securities and Exchange Commission (SEC) has revoked the corporate registration of Farm to Market (F2M) Agri-Farm OPC for soliciting investments from the public without the necessary license from the Commission.
In an order dated October 9, 2024, the SEC Enforcement and Investor Protection Department (EIPD) revoked F2M Agri-Farm OPC’s certificate of incorporation for violating Section 44 of Republic Act (RA) No. 11232, or the Revised Corporation Code (RCC), Sections 8.1, 26.1 and 28.1 of RA No. 8799, or the Securities Regulation Code (SRC), and Section 11 of RA No. 11765, or the Financial Products and Service Consumer Protection Act.
The RCC prohibits corporations from possessing or exercising powers beyond those conferred by law and provided under the articles of incorporation.
The SRC, on the other hand, prohibits the selling or offering of securities without a registration statement duly filed with and approved by the Commission, and requires people engaged in the business of buying and selling securities to be registered with the SEC.
Accordingly, F2M Agri-Farm OPC was ordered to pay an administrative fine of P1 million, while its incorporator and nominee were directed to pay the same amount.
The EIPD found F2M Agri-Farm OPC and its related entities, namely F2M Tarlac City-Main Branch, F2M, F2M Paalaga System, Hog Raising Business, F2M Tuguegarao Branch, F2M Dagupan, F2M La Union Branch, F2M Lagawe, Ifugao, F2M-Solano Nueva Viz. Branch and F2M Tayug, to be offering investments in the nature of an investment contract without the necessary registration and approval from the SEC through the F2M 3 Months Paalaga System.
Under the Paalaga System, F2M and its related entities enticed the public to buy one piglet for P5,000 with a promised return of P7,600 after three months, representing a 30% return on investment less 5% service charge, as advertised on their social media page. If an investor buys 20 piglets for P100,000, the investor is expected to receive P152,000 return after three months.
The related entities of F2M Agri-Farm OPC are not registered as corporations or partnerships with the SEC and do not have the secondary license to solicit investments or offer securities.
The company’s illegal solicitation of investments also constitutes fraud due to its similarity to a Ponzi scheme, where profits or payouts are taken from incoming investors or additional pay-ins of existing member-investors as it does not have any underlying legitimate business to source the returns.
As early as April 16, 2024, the SEC has already issued an advisory against the company and its related entities. The Commission subsequently issued a cease and desist order against F2M Agri-Farm OPC on August 20, 2024 to stop the company and its related entities from soliciting investments.
