By Ruelle Castro

The Securities and Exchange Commission (SEC) has ordered PHI Fitness Gym Inc. to stop soliciting investments from the public.

The SEC in an order said the company, registered as a sole proprietorship with the Department of Trade and Industry has been enticing the public through video presentations and social media particularly on its Facebook account to invest in its gym business.

The scheme requires an investment of at least P250,000 which makes an investor a part owner of PHI Fitness and entitles the investor to a gym membership.

In addition to the membership incentive, PHI Fitness guarantees investors a monthly return of 10 percent with freebies consisting of Gatorade/drinks, coffee, sauna, basketball court use, boxing ring use, among others, for a period of five years.

The SEC said the investigation by its Enforcement and Investor Protection Department produced a copy of the memorandum of agreement (MOA) between PHI Fitness and an actual investor, which outlines the scheme.

The SEC said the MOA provides that “the capital contribution of the parties are considered partnership assets, and as such neither party can demand the division of the assets during the five-year term.”

PHI Fitness is offering unregistered securities in the form of investment contracts without the requisite license, violating the law, the SEC said.

PHI Fitness is not authorized to sell or offer securities with the SEC’s Company Registration and Monitoring Department, Corporate Governance and Finance Department, and Market Securities Regulation Department, certifying that PHI Fitness is not registered as a corporation and is not a registered issuer of any securities as provided by the Securities Regulation Code, it added.

“All persons claiming and acting for and on behalf of PHI Fitness are hereby ordered to cease and desist from engaging in the solicitation of investment,” the SEC said.

It likewise prohibited PHI Fitness and any individual claiming and acting on behalf of the company from touching funds in its depository banks to preserve the assets of investors.