SEC Flags eToro as Unauthorised for Investment Offerings in the Philippines

By: FintechNews
Source: fintechnews

T

he Securities and Exchange Commission (SEC) of the Philippines has issued a warning to the public regarding eToro, an online investment trading platform that is not authorised to sell or offer securities in the country. The notice highlights the importance of compliance with regulatory requirements and the risks associated with using unregistered platforms.

eToro, which presents itself as a platform making trading accessible to anyone, anywhere, and aims to reduce dependency on traditional financial institutions, is not registered with the SEC. It offers a crypto exchange that supports trading in over 30 cryptocurrencies, and platforms for trading commodities, currencies, indices, and a select range of stocks and exchange-traded funds (ETFs).

Despite being a registered broker/dealer in various other jurisdictions, questions of “is eToro legal in the Philippines” have arisen, leading to the securities watchdog stating publicly that it does not have the necessary permissions to legally offer these services.

In separate April 2023 advisories, the SEC explicitly advised the public to avoid investing in schemes offered by eToro, along with other entities such as XM, Sandalwood Capitals Financial Advisory Service, Ate Anna’s Retail and Wholesale Online Shop, and SparkFX Bitcore.

These companies have been identified as non-compliant with the Securities Regulation Code (SRC), which protects investors from fraudulent practices often reminiscent of Ponzi schemes, where new investors’ funds are used to pay fake returns to earlier investors.

eToro has been actively promoting its services on various social media platforms to attract a global audience, the SEC filing states, including in the Philippines. The platform allows users from the Philippines to create accounts to invest and trade in these unregistered products.

The SEC stresses that securities offered to the public must be properly registered with the commission, including detailing the securities’ issuance price and the use of the proceeds.

The penalties for offering and selling securities without the appropriate licences are severe under the SRC, including fines of up to P5 million and imprisonment for up to 21 years.