To help protect celebrity endorsers from being dragged into illegal investment scams, Sen. Robinhood “Robin” C. Padilla has filed a bill penalizing such illegal activities.
Padilla’s Senate Bill 2889 aims to prevent a repeat of what happened to actress Nerizza “Neri” Naig-Miranda, who was arrested for alleged syndicated estafa and violations of the Securities Regulation Code.
“Recent events reveal a growing concern for the welfare of endorsers whose names are dragged into various investment scams. Oftentimes, they are the first ones to be accused of crimes related thereto just because their names and faces were made prominent by companies who secured their services as endorsers,” he said in his bill.
“This measure seeks to offer protection to endorsers by providing mandatory provisions into their engagement agreements that will clearly define not only their obligations but more importantly, their relationship with the company and their noninvolvement in any sale of investment contracts and securities if the latter is engaged in such business,” he added.
Under Padilla’s proposed “Product Endorsers Protection Act,” all product endorsement agreements must have a full disclosure of the nature of the business and all products covered by the endorsement.
The agreements must also have a categorical statement on whether the business is engaged in the sale of investment contracts and other securities.
“In the event that the business or venture is engaged in the sale of investment contracts or other securities, there must be a clear prohibition on the part of the endorser to engage in the promotion or sale thereof with an expectation to receive profits or commissions if the same is not a licensed broker … Businesses or ventures engaged in the sale of investment contracts and other forms of securities shall refuse to accept investments obtained through the efforts of any endorser if the same is not a registered broker,” the bill said.
Endorsers who represent themselves as agent of any business or venture unauthorized to sell investment contracts and other forms of securities shall be liable for any claims filed against them.
A fine of P100,000 is imposed for the first offense; P300,000 for the second offense; and P500,000 to P1 million and revocation of the Certificate of Registration for the third offense.
