WCM777, led by owner Phil Ming Xu, recently confirmed it sold unregistered securities in the United States. This admission follows a period of regulatory scrutiny across multiple countries and continents for the company.
Xu issued an update on the WCM777 website, stating that "negotiations between our lawyers and the Massachusetts' Office of the Secretary went well. We have reached a settlement with Massachusetts." This statement came after the Massachusetts Securities Division concluded its investigation into WCM777's business.
The investigation resulted in a ban on WCM777 operations within Massachusetts. The company was also ordered to refund over $300,000 to affiliate investors based in the state. WCM777 faces a permanent prohibition from conducting business in Massachusetts.
Xu's update continued, "However, because the sale of securities failed to fully comply with laws and regulations in United States, our operations in the U.S. will be on hold until further notice; WCM Limited will continue operations." This acknowledges the non-compliance with US securities laws.
But despite the declared "hold" on US operations, the company reportedly still accepts funds from US affiliates for investment. These transactions are processed through Global Payout, a payment processor located in California.
WCM777 has also faced international setbacks. The company was recently suspended in Colombia, where its top affiliates are under criminal investigation. The Peruvian government may also take similar action.
Xu outlined plans for the company to "implement new compliance procedures and register with the SEC before selling securities." He added that the company's system needs further improvement "to ensure global legitimacy." WCM777 has already registered in California under legal counsel, according to Xu, with intentions to "soon re-enter the U.S. market."
Xu's explanation for the company's regulatory issues focused on operational shortcomings. He cited "customer service, IT support, and sales training" as areas "far from ideal." This perspective does not address the core business model, which involved accepting new affiliate investments to pay out existing investors' promised returns, a structure consistent with a Ponzi scheme.