In wake of Neri Naig case, SEC urges celebs to be sure of endorsements

Following actress Neri Naig’s arrest for alleged estafa and violation of the Securities Regulations Code (SRC), the Securities and Exchange Commission (SEC) on Thursday cautioned celebrities and other popular personalities to be cautious about their endorsements and ensure that their names are not used to promote illegal activities.

In an interview with GMA News Online, SEC Enforcement and Investor Protection Department Director Filbert Catalino Flores III clarified that the case against Naig was not filed by the SEC, thus, the agency does not know facts of the complaint.

The 41-year-old actress and businesswoman was served the warrant of arrest at a basement convention center inside a mall in Pasay City on November 23.

The actress is facing an estafa case in relation to Presidential Decree 1689, which increases penalty for estafa "committed by a syndicate consisting of five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme."

Syndicated estafa results in the misappropriation of money contributed by stockholders, members of cooperatives or associations, or solicited from the general public.

She is also facing 14 counts of violation of Section 28 of the Republic Act 8799 or the Securities Regulation Code, which includes provisions on registration of brokers, dealers, salesmen, and other associated persons.

Naig's camp has since filed a motion to quash and her arraignment has been moved to January 9. She is currently detained at the Pasay City Jail.

While the SEC is not a privy to the case, Flores explained that the actress could be liable for estafa and violation of the SRC “kasi pinalalabas doon allegedly siya ang nag-endorse [because it appears allegedly she was an endorser].” 

“Dapat registered ka as a salesman, broker or associated person para mag-offer ng [investment]… dahil na-engganyo ‘yung mga tao, dahil sikat… nag-invest sila at tinakbuhan. Merong participation para mag-invest sila,” the SEC official said.

[You must be registered as a salesman, broker or associated person to offer [an investment]...because people were encouraged, because the endorser is famous, they invested and the company ran. Their participation led to the customers investing.]

Flores said that there is no issue when celebrities are endorsing a product or service, but legal issues could arise if the endorser persuades the public to be an investor, franchisee, or partner in a business venture.

“May liability na ‘yun… it constitutes soliciting investment na po,” he said.

(There is a liability there...it already constitutes soliciting investment.)

Naig’s case allegedly stemmed from her endorsement of Dermacare-Beyond Skin Care Ventures’ investment schemes, in which the company supposedly enticed the public to invest in its franchise partnership deal with a promise of a guaranteed return of 12.6% interest per quarter for a five-year period.

Citing what the SEC knew “off-hand” about the case, Flores said that Naig could be liable for violation of SRC and estafa since she appeared to have been an endorser of Dermacare’s investment scheme.

“Hindi naman ‘yan ordinaryong tao so malamang totoo ‘to… so diyan nag-invest ako… tapos biglang natakbuhan pati ikaw nasabit kasi dahil sa’yo kaya ako nag-invest,” the SEC official said, explaining the context why famous personalities could be held liable for indirectly leading investors to a potential investment fraud.

(You're not an ordinary person so this could be legit, so I invest...and then suddenly they run and the endorser is on the hook, as I invested because of you.)

With this, Flores said celebrities and popular personalities should “make sure alam niyo ano ‘yung ine-endorse niyo at hindi nagagamit ‘yung mukha niyo for illegal things.”

(Make sure you know what you are endorsing and that your face is not being used for illegal things.)

Estafa vs SRC violation

Flores said that estafa and soliciting investments are almost the same.

However, he said that the main difference between the two cases is that estafa has an element of deceit or “mala in se,” which literally translates to “immoral in itself.”

Meanwhile, soliciting investment does not necessarily mean that there is an intent to deceive, therefore it is “mala prohibita,” which means it is “wrong because it is prohibited by law.” — BM, GMA Integrated News