Philippine Legislator Files Bill to Protect Endorsers from Investment Scams

Senator Robin Padilla Introduces Bill to Safeguard Endorsers in Investment Scams

Robin Padilla, a Philippine actor-turned-senator, has introduced Senate Bill 2889, a new legislative provision aimed at safeguarding endorsers from undue accountability in investment schemes. This measure is in reaction to growing worries about the role endorsers play in promoting fraudulent schemes, notably in crypto and FX trading.

The law was presented in response to recent scandals regarding Dermacare, which the government has accused of soliciting unapproved investments and marketing unregistered securities. The arrest of actress Nerizza “Neri” Naig-Miranda and the arrest warrant for comedian Rufa Mae Quinto, both tied to Dermacare, emphasized the vulnerability of endorsers, who frequently suffer legal penalties for just lending their names to these companies.

Padilla's bill comes at a time when the role of endorsers is under scrutiny, particularly in terms of their legal responsibilities in promoting business enterprises that later face claims of investment fraud. “Recent events reveal a growing concern for the welfare of endorsers whose names are dragged into various investment scams,” Padilla stated in support of the bill. He emphasizes that endorsers are sometimes the first to face legal charges simply because their images and names appear in advertising efforts, even when they are not participating in unlawful activity.

Key Provisions of Senate Bill 2889

The proposed legislation proposes to change the structure of endorsement agreements to safeguard endorsers. Padilla suggests that all endorsement contracts contain required sections that clearly describe the endorser's obligations and specify expressly that they are not involved in the marketing of investment contracts or securities. This is done to ensure that endorsers are not held responsible for supporting fraudulent schemes they were ignorant of.

Businesses must offer complete disclosure of the nature of their activities, including whether they sell investment contracts or securities, under Senate Bill 2889. Endorsers will also be required to sign agreements stating that they will not promote or sell such securities unless they are licensed brokers.

Furthermore, the measure underlines that organizations participating in the selling of securities must guarantee that investments are not made through endorsers who are not licensed brokers. It goes on to say that any endorser who falsely represents themselves as agents of an investing business will face legal action. Penalties for breaching the law include increasing fines: P100,000 for the first violation, P300,000 for the second, and P500,000 to P1 million for the third, as well as the revocation of the company's certificate of registration.

Protecting Endorsers From Legal Ambiguities

Padilla emphasized that many endorsers are uninformed of the legal complexities of the Securities Regulation Code and frequently become embroiled in legal troubles as a result of a lack of public understanding on the subject. The law aims to close this gap and avoid exploitation by defining endorsers' duties in commercial transactions, particularly those involving securities.

Last Thoughts:

Senator Robin Padilla's legislation is an important step in protecting endorsers from becoming unwittingly implicated in investment schemes. SB 2889 intends to protect both endorsers and customers by creating clearer norms and stricter criteria in endorsement contracts, as well as guaranteeing more openness in commercial transactions. This law has the potential to create a precedent for more responsible endorsement methods in the future.