Recently, Quebec’s Financial Market Authority issued a decision banning any investment in the activities of TachoEasy, a company that provides geolocation “trackers” for cars or valuables such as handbags or precious parcels. The company has experienced rapid success with its business model which consists of actively involving consumers in communication and strategic development efforts.
There is need to reconsider this decision which reflects a growing tendency of adopting reactionary positions, based on apprehension as well as the anticipation of a misunderstanding and a lack of financial literacy on the part of the average ruling class. It is unfortunately nothing other than the pendulum of the financial markets’ regulation which, after swinging towards excesses and impunity, is now swinging to the opposite direction to give way to an uninformed rejection of modern marketing techniques such as multi-level marketing.
In order to avoid having to one day answer to taxpayers in the face of a major crisis like the one experienced by the financial world in 2008, the regulatory bodies are content to restrict the scope of action of investors who try to operate outside major stock exchanges, rather than putting in place a fair and coherent legislative framework and ensure that people fulfil their responsibilities, without taking into account their participation in major institutions such as the Royal Bank of Canada which received $ 25 Billion in total impunity during the Subprime crisis to avoid bankruptcy.
In a bid to criticize constructively and conduct some socio-economic reflection, coupled with the fact that I myself am a member of an MLM (Multi-Level Marketing) network which contributes to the growth of the business of one of the respondent entities and which I feel has been personally wronged, the following is a collection of extracts from the decision of the Financial Market Authority, along with a series of comments intended to correct some misconceptions and raise significant inconsistencies in the analysis done by the regulator.
According to Decision 2015-007-001 of 15 April 2015:
The Financial Market Authority is the plaintiff and GetEasy Ida, iGetMania Ltd, International Finance Corporation Ltd and TachoEasy Middle East Fzc, are the responding parties.
The first point to raise here, and which clearly evokes a superficial investigation by Quebec’s Markets Authority, is that TachoEasy Middle East is an independent entity which has never had and which, a priori, does not envisage any future contact with the other responding parties.
Let us now look at the claim (page 3: the office states below the allegations of the claim of the authority) starting from the introduction (page 4), with number 1 reading thus: this claim concerns three investment schemes linked to the Portuguese company GetEasy Lda, the English company iGetMania Ltd and the company TachoEasy Middle East Fzc.
The investigator suggests that the three companies cited were working in concert, which is an invalid assumption with regard to the point raised above. Let us thus keep aside GetEasy and iGetMania, to focus on the accusations against TachoEasy Middle East.
Let us start with number 4 of the introduction (page 4 of the decision), where what is written does not correspond to the reality: TachoEasy Middle East proposes illegally to the public: “to invest in the Valuable Idea Concept scheme (hereinafter referred to as VIC) by purchasing a product pack (hereinafter product pack) in order to get a commission on the revenues generated by the product pack – to recruit two other people, who will in turn be encouraged to recruit two other people and so on. ”
The fact is, TachoEasy Middle East does not do any thing of the sort. TachoEasy Middle East rents out equipment (geolocators) on a rental basis, Article 9 does not therefore apply to TachoEasy Middle East … Furthermore, the suggestion that VIC is a “ploy” cannot be understood. Why? What are the bases of this accusation? Furthermore, why would the procedures be described as illegal?
And after the “justifications”, the claims formulated by the Financial Market Authority:
The Financial Market Authority issued an order prohibiting TachoEasy Middle East from acting as advisor.
TachoEasy Middle East has simply never done what is described above. TachoEasy Middle East has never done business in Canada.
Issuing an order prohibiting the carrying out of any activity intended to perform, directly or indirectly, a securities transaction in any form of investment mentioned by the LVM, especially through a website, against TachoEasy Middle East.
Based on the information available and the fact that the company mentioned has never been active in Canada, this paragraph makes no sense without any objective basis, and does not apply to TachoEasy Middle East.
Prohibiting any investor of TachoEasy Middle East from recruiting others to in turn become investors of TachoEasy Middle East and, therefore, engage in any activity related to the operations of TachoEasy Middle East.
Here again, the absurd nature of this text is noted. TachoEasy has no investor. The company works (once again, not in Canada) based on its community of distributors and users. Like many of such companies, TachoEasy interests its network through commissions (MLM) using the Valuable Idea Concept (VIC) brand. There are no investors in the legal sense of the word. In all cases, this ban would apply to the nationals of Quebec. It cannot be enforced to obtain practical results.
Ordering TachoEasy to block all access to its website, known at the address xxx, for any IP address from Quebec, to prevent all Quebec residents from consulting this website.
This is a reactionary proposal based on political considerations rather than legal and / or economic ones. This applies specifically to the freedom of information, a right that Canada strives to protect. Moreover, the address given in the report does not match that of TachoEasy Middle East. Again, this is akin to a demagogic clamour cut to suit the Canadian financial elite.
Ordering TachoEasy Middle East to block the admission of any new investor residing in Quebec.
As explained, TachoEasy Middle East does not work like that. There are no investors, neither in Quebec nor elsewhere.
Authorizing the Financial Markets Authority to proceed in notifying TachoEasy Middle East of the decision, through a notice to be published on the Financial Markets Authority’s website.
This can not constitute a valid legal process. The respondents should be notified by registered letter, not by a notice published on a website with very limited visibility.
This is followed by descriptions, still baseless, of the activities of the respondent companies. Regarding GetEasy we will just mention the confusion made in the relationship between GetEasy LTDA and GetEasy Limited (the latter is in Macao and has nothing to do with GetEasy Ltda, a Portuguese company). Thus, we go directly to TachoEasy Middle East and it reads:
“TachoEasy Middle East is a company based in the Hamriyah Free Zone in Sharjah in the United Arab Emirates. It holds a business license there, etc…”.
This statement is true.
We still read in the report that TachoEasy Middle East is the result of the international expansion of the group of companies founded by Loios and is part of a group with four other companies: TachoEasy Iberica Sl, TachoEasy Med-Mar, Tacho Easy Maroc and TachoEasy Qatar.
This is false. TachoEasy Middle East is a company founded by Mr. Loios, no doubt, but it has nothing to do with the others cited and the partnerships of the entities are separate and different. Moreover, TachoEasy Maroc and TachoEasy Qatar do not exist. The investigative work seems clearly to have been conducted unsatisfactorily.
TachoEasy Middle East is continuing the activities of GetEasy and iGetMania by offering to finance the renting of geolocators for its members.
Not being aware of the activities of the companies indicated, we can, however, reiterate that TachoEasy Middle East does not have members, but many distributors and users. The user rents equipment and hence finances the activities of the company, as the business model provides.
The report states that TachoEasy Middle East promotes the VIC programme.
This is false. VIC is promoting its own programme as can be verified.
The report states that TachoEasy Middle East is not registered with the Authority as a broker.
Indeed, but TachoEasy has never done business in Canada in general and Quebec in particular.
The report also states that TachoEasy Middle East has not filed a prospectus.
Why should it file one? TachoEasy has no business plan of entering the Canadian market.
Thereafter, the document tries to present “the facts.” There we learn that the Authority worked and based its investigation on an anonymous tip-off, concerning GetEasy and not TachoEasy.
What a strange way of building an investigation. An anonymous tip-off against one of the companies involved. The entire investigation and its findings are therefore based on an anonymous testimony whose value and weight, in the light of all the laws of democratic countries, are null, or almost. How is it possible, in a democratic country, to conduct an investigation and draw conclusions on the basis of anonymous tip-offs, without even giving the respondent parties the opportunity to comment on the subject? And, above all, what value can these conclusions have before the law?
Still in the “facts”, this time around directly concerning TachoEasy Middle East:
“the investigation revealed that TachoEasy Middle East is continuing the business activities of GetEasy and iGetMania”
Difficult to understand how the report arrived at such a conclusion. An anonymous informer once again?
“The information collected about TachoEasy Middle East comes from its website, a presentation and information obtained by the investigator from a member”
Which website? As a reminder, the document cited an invalid address. Moreover, TachoEasy does not have members, but administrators, technicians, employees and customers. The report mentions a presentation and information obtained by the investigator from a person who claims to be a member of TachoEasy Middle East. Another anonymous informer, no doubt.
“TachoEasy Middle East offers its investors …….. “.
As previously clarified, TachoEasy has no investors.
And they continue, from number 110 to 125 to describe the procedures that have nothing to do with the activities of TachoEasy Middle East. However, it should be noted that the activities and procedures described are not illegal. The title “iii -Links between TachoEasy Middle East and GetEasy and iGetMania” is redundant and does not deserve to be analyzed.
Regarding warnings against the respondents:
None refers to TachoEasy Middle East. The name of Mr Antonio Loios, for its part, was mentioned without valid basis.
It continues with “web infiltrations” evoked by the investigator and the account of “investments” made by a few people contacted by the investigator. All this concerns GetEasy, except for this sentence on page 28: ” in order not to abandon their teams and the commissions blocked in the” back office “, the leaders met Antonio Loios, CEO of GetEasy and TachoEasy and they decided to work directly with TachoEasy”.
Which leaders? Will they be anonymous too? When? These comments reveal a disturbing lack of clarity given that they are from a government decision authority. The decision is likely referring to a document signed by the parties. Where is this document? And which TachoEasy are we talking about? TachoEasy that do not exist? Or those which have no activity on Canadian soil?
It continues with title iv “compelling reasons”: “… and TachoEasy Middle East having a pyramid structure …”
How is it possible to say that TachoEasy Middle East has a pyramid structure?
And we move on to “obligations”: “And TachoEasy Middle East asked and continues to ask people to participate in a pyramid type scheme, a participation which takes the form of an investment contract.”
As already seen, TachoEasy Middle East does not practice a pyramid scheme and there is no investment contract, but lease or commodatum agreements.
And No. 241 (page 30) has a serious statement: “without an immediate decision of the office, it is feared that the illegal activities of TachoEasy Middle East will continue to the detriment of the public”.
In fact it is very serious to accuse TachoEasy Middle East of any illegal activity, without proof and based on the statements of a hypothetical anonymous witness. Moreover, is the call for an immediate decision of the office intended to eliminate any possibility of the respondents to defend themselves?
And after a few pages of consideration, we reach the “device” (page 38) with several paragraphs.
TachoEasy Middle East should not contest neither the three prohibitions, nor the first two orders (“ORDER”), simply because they do not apply to TachoEasy Middle East. Conversely, TachoEasy Middle East must not accept the third order in view of the lack of adequate basis and should not also accept that the notification of the decision to the respondents be done by a notice published on the Financial Market Authority’s website. A registered letter with acknowledgment of receipt would be good practice, to respect the procedures that govern any state of law. Without this, the notice cannot be taken into consideration and has no legal authority. In view of the above, TachoEasy cannot take act of the “statement of claim” signed by the legal department of the Financial Market Authority, attorneys of the plaintiff. Finally, it is surprising that the investigator Madam Hélène Guibault can say in her affidavit that all the facts alleged in this “statement of claim” are true. Where is the evidence?