The Securities and Exchange Commission on Friday warned Nigerians against investing in Ponzi schemes, adding that any investment schemes that promise unrealistic returns should be treated with caution.
The Director-General of SEC, Lamido Yuguda, gave the warning while addressing Journalists shortly after the Second Capital Market Committee meeting.
Ponzi scheme is a fraudulent investment operation where the operator, an individual or organisation, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
Within the last few months these illegal fund managers have adopted various strategies to collect money from would-be investors.
Some of them solicit for funds from unsuspecting members of the public by enticing them with returns of weekly or monthly interest on investment of between 25 per cent to 50 per cent depending on the nature and investment type.
They usually indicate a registration period of between one and two weeks and also issue numerous notices directing all prospective customers to make deposits into their bank accounts.
Huge amount have been lost through these schemes by unsuspecting Nigerians.
Speaking on the development, Yuguda called on Nigerians to always check the website of the Commission for list of approved capital market operators before making such investment decisions.
He cautioned the investing public against making hasty investment decisions when the returns on such investment are too attractive.
The SEC DG assured that the commission will continue to work with relevant agencies of government and other critical stakeholders in the capital market to tackle the issue of ponzi schemes.
He urged every capital market operator to conduct their businesses within the market functions approved for it by the Commission.
The SEC Boss said the Commission will not hesitate to deal decisively with any operator who carries out any activity outside the function approved for it by the Commission
He said, “The Commission continues its campaign against illegal operators in the capital market, especially Ponzi Schemes and has adopted multi-level engagements with media platforms and regulators of publicity agencies in order to curb the reach and activities of these illegal operators.
“While we continue our activities to resolve the complaints that have been forwarded to the Commission through the official channels, it is important to reiterate to the investing public to bewary of unscrupulous schemes that promise unrealistic returns on investment.
“We will like to use this opportunity to reiterate our commitment towards zero tolerance for market infractions. We urge every capital market operator to operate within the market functions approved for it by the Commission.”