Yes, it is a scam.

In fact, the Securities and Exchange Commission (SEC) has issued a warning regarding the investment taking activities of this company and its affiliates. According to the SEC, no secondary license has been issued to One Lightning Corporation. It is not supposed to be soliciting investments or selling investment products to anyone in the Philippines.

The SEC advisory includes a warning to those who intend to participate in the modus operandi of One Lightning Corporation. Individuals who try to convince others to be part of the activities of the said company will risk getting prosecuted for the violation of the Securities Regulation Code. Those who will continue recruiting more members or investors will be charged accordingly.

SEC Investigation

The Securities and Exchange Commission conducted further investigation on One Lightning because it is a SEC-registered company. The SEC cannot simply release a statement similar to the one issued for Emgoldex Philippines, which is not even registered with the Commission.

The SEC investigation found that One Lightning Corporation invites “investors” to its cosmetics and health care product line. These prospective investors are promised high returns on their investments in a scheme marketed as a “revolutionary compensation plan.” In this scheme, investors will get 70% of the company’s profits.

Just like other companies that attract investors through referrals or recruitment, One Lightning Corporation also dangles recruitment commissions or bonuses called “referral award” and “maturity award,” both of which are pecuniary in nature.

The referral award is given to someone who successfully recruits a new investor, while the maturity award is given to someone whose recruits have recruited other investors. The referal award is around 5% of the investment paid in while the maturity award is around 2%.

In an interview with ANC, Gerard Lukban, commission secretary of the SEC, said that it is not enough that a company is registered in the Philippines for its activities to be considered legal or legitimate. In the case of One Lightning, the act of selling of investment contracts to the public requires SEC’s scrutiny of the company’s registration statement and prospectus of what is being offered.

The SEC referred to One Lightning Corporation’s activities as a pyramiding operation.

Why SEC considers One Lightning a scam

According to SEC secretary Gerard Lukban, there were two violations committed by One Lightning: (1) the questionable investment contracts being offered, and (2) the company’s lack of a licensed salesman to sell the investment contracts. As the SEC advisory stated, the company does not have the permission to publicly offer securities and solicit investments.

Avoiding Similar Scams

Financial advice websites as well as government authorities will tell you a number of common factors that indicate whether or not an investment or “grow your money” company is fraudulent. They include the following:

• Lack of government licensing (registration) or recognition by the appropriate government agencies
• Lack of legitimate products or actual revenue-generating business operations
• Too good to be true (guaranteed high returns)
• Difficult to find official information about the company
• Focus is on the recruitment of “investors”

It’s important to note, however, that fraudulent companies at present have already evolved. Some are now registered with the government and also have products to sell. That’s why emphasis should be placed on “appropriate registration or licensing” and “legitimate products.”

As the SEC secretary mentioned, it’s not enough for a company to be registered and that the products being offered should also be examined for the proper licensing or permission to be publicly offered. In the case of One Lightning, it is SEC-registered, but it does not have the necessary permission to offer investment products.

It’s important to be very cautious with all financial decisions you make, especially when dealing with investment opportunities that are mostly being marketed online. Skepticism is advised and encouraged. This need for prudent financial decision-making, however, is not limited to investments. It also applies to making decisions on loans and credit cards.

Fortunately, there are transparency and comparison services like MoneyMax that can help you in differentiating the legitimate offers from the fraudulent ones, as well as the good from the better. They can facilitate a more informed scrutiny of your options. Comparison sites curate a great deal of relevant information and resources that make it easier to see the pros and cons of the choices you are considering.

The Internet is your friend. Make good use of it to research and compare, so you can be at an advantage in your financial decision making concerns. Don’t fall for a scam like One Lightning Corporation.

Sources:

http://www.sec.gov.ph/docs_home/2015Advisory_One_Lightning_Corp.pdf

http://www.abs-cbnnews.com/business/03/11/15/why-sec-issued-warning-vs-one-lightning-corp

http://business.inquirer.net/188284/sec-warns-investors-against-one-lightning

http://www.forbes.com/pictures/mjf45egim/pay-attention-2/

Question: I have been reading about the peso getting stronger and the BSP controlling the exchange rate. Why is the peso getting stronger and what are its effects? Why is the BSP controlling it? —Name withheld upon request, asked via e-mail

Answer: One of the most common questions asked of me is the future of the US dollar in relation to the exchange rate. Things have been different these past years as we have seen the value of the dollar plummeting and the peso appreciating. If my recollection serves me right, I remember the dollar reaching a high of about 1: P56. Imagine buying a lot of dollars at that time and holding it up to today—that’s a lot of money down the drain.

There are generally two reason why the exchange rate is the way it is now. The US economy has been in a downturn. The US government’s response to the economic woes is to pump more money into the economy in the hope that it will usher growth. Unfortunately, the move means they need to print more money,  which ultimately affects the currency—that’s the law of supply and demand at work. More supply and not so high demand will affect the value of the dollar.  More demand is anchored on the performance of the economy, so the US is now in a very tricky situation.

Over this side of the globe, there has been much attention to Asian economies, led by China. Business (and the economy) must go on and they are continuously looking for areas where they can continue generating revenues. The Philippines, although a small player even in the region, has been getting its share of the action. The rising OFW remittances and the sterling performance of the BPO sector have kept our economy going and growing. It is said that the fundamentals of the Philippines are sound and the Aquino administration has been busy putting things in order.

The US economic woes coupled by the Philippine economy gains are the primary reasons why we see the exchange rate tipping to our favor.

Why is the concern on the strengthening of the peso getting much attention? I asked my friend, Dr. Alvin P. Ang, of the Philippine Economic Society, and this is what he says:

“The appreciation of a currency is generally viewed as a sign of a strong economy.  That view is based on international trade—where physical trading of manufactured goods is key.

In the economy we are in, we are dominated by non-tradables mainly components of services which include BPOs, real estate, tourism, communication and transportation.  These components invite foreign exchange if they are relatively cheap compared to other countries.  This is what is happening at the moment.  We are having large inflows of foreign exchange leading to a peso appreciation.  However, these are not due to increased productive capacities per se but on services which cannot be traded physically.  I think the BSP looks at it this way—the peso appreciation will not be sustainable unless the foreign exchange creates productive capacities leading to sustainable jobs.  Thus, it sells dollars in the market or buy them as the case maybe; until a credible evidence of productive expansion is seen.  At the moment, manufacturing is just expanding its base and the current growth is fueled by services primarily real estate, construction, BPOs and tourism.

“Besides, a strong currency could turn off foreign investors (less peso for their investments), tourists (will make Boracay more expensive than Phuket or Bali) and BPOs (will make Bangalore better than Makati).  Worse, it will affect inflows of exporters (making our bananas expensive compared to Costa Rica) and OFWs. In the long run, a strong currency is not just the monetary value; it must be a combination of trust and faith in governance capacities, productive expansion and job creation, and the quality of the workforce, tourist spots, real estate services, among others.

“Thus, the peso will not appreciate sharply but will trade around 39-41. The view of a strong currency has to be linked with its long term sustainability.”

Dr. Ang raised a lot of valid points and enlightened me about the current strategy of the government. However, interventions usually have limited efficacy and we will eventually have to face the fact that market forces will ultimately exert themselves. While the BSP is giving us some relief from the strengthening peso, we must also start preparing by improving our efficiencies and be prepared for such eventuality. Industries must be more efficient to ensure profitability, BPOs should further enhance their competencies to ensure competitiveness, tourist attractions should be improved and the dollar earners should manage their finances better and take advantage of investment opportunities to ensure the growth of their wealth.

To those wondering what to do with their greens, re-read this blog and read between the lines.

My 2 centavos.

Also appears at the Inquirer.

Question: Where should I put my money? In a bank, property, business or stocks?—Miccael Ibarra Naig via Facebook

Answer: I always believe that investing is a great idea and I pray that all Filipinos think and act the way you do. Before I answer your question, I encourage you to first consider three things: your investment objective (the reason why you are investing), time frame (how long you will keep the investment) and risk tolerance. It is critical that you know these three things before even selecting an investment option.

There is no such thing as a “best” investment. The investment instruments you mentioned have their advantages and disadvantages, their own merits and flaws. Let me discuss those choices that you are considering.

Banks are the most popular choice of many. Banks are everywhere and this makes depositing your money in banks a convenient option. When you say “bank,” I’m assuming that you are referring to traditional bank products like savings accounts and time deposits. These bank products are among the most liquid investments you can make and the risks are also among the lowest. The downside, however, are the yields. They may be the safest options but they give the lowest returns. As they say, low risk, low returns. Having low returns, especially if below inflation rates, will erode the value of your money in the long run. Banks today offer other products other than the usual deposit products. You can invest in the instruments they offer like Unit Investment Trust Funds, mutual funds, bonds and insurance. Take time to know what your bank offers other than traditional deposit products.

Property is the investment every Filipino wants. Your parents and grandparents had probably told you that the best investment was land. However, saying that land is the best investment may be too ambivalent. Real estate’s greatest attraction is its being a tangible investment—you can see and use it unlike paper investments. Land usually appreciates in value giving you capital growth, or it can generate a steady flow of income through rentals and capital gains, when you decide to sell it. There are times, however, when real estate investments do not appreciate or, in some cases, their appreciation does not meet your expectations. Also, there are recurring costs in property investments such as real estate tax, administrative or association dues and common area charges. When you sell a property, you will be slapped a hefty capital gains tax on top of the broker’s fees. When you sum up all the money you need to spend during the time you are holding your real estate investment, you will realize that your gains are not as substantial as you thought it would be. Another downside in real estate investment is its cost—you need to spend a huge sum to buy land. If you decide to borrow money to finance your real estate investment, the interest that you have to pay may just eat up the gains you will make. Buying real estate because you need to live in it is another story as it is not an investment.

Business—another Filipino dream. Everyone wants to be an entrepreneur and why not? Businesses can potentially give you the highest returns. A business that succeeds can make one a millionaire, even a billionaire. There are many success stories of people who started with little but are now very wealthy because of their businesses. However, business endeavors are the riskiest among all these investment options, as they are speculative in nature. There are more businesses that fail rather than succeed, which is not encouraging for a “newbie” in the business world. Further, putting up a business requires more than just capital—competence, passion, timing, market and a lot of studying are needed when you are considering to do business.

Stocks—today’s rising star. There is so much attention to the stock market today as more and more Filipinos are being enticed into investing in equities because of its stellar performance in the last two to three years. Many investors are very optimistic with our local stock market and you will find many experts predicting that our stock market will further go up this year. Investing in equities today is also more convenient. Even with only a small amount, you can buy stocks through brokers (and also online) or through pooled funds such as mutual funds or UITFs. Let me reiterate the risk-return relationship here—high returns, high risks, and vice-versa. While it is true that the stock market has been giving extremely good returns lately, there were also times when investors lost a lot of money. The stock market is not as predictable as people think it is and all the gains over the last three years can also be wiped out in a short period of time.  More so, investing in the stock market, especially when you plan to trade, requires a lot of competency and time. If you don’t have the competency and the time to trade in the bourse, you should keep your day job.

My advice is for you to consider all the pros and cons of all the investment options you mentioned and choose those that will suit your objectives the most. I also recommend that you diversify your investments. All these options have their advantages (and disadvantages), but if you have a diversified portfolio, you are spreading your risks. A common but very wise saying we often hear with regard to investing is this: “Do not put all your eggs in one basket.” Here’s an even wiser advice for you: “But divide your investments among many places, for you do not know what risks might lie ahead.”—Ecclesiastes 11:2, NLT

Appears at Inquirer