Chinwendu Obienyi
When the then Minister of Finance and Co-ordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, warned the Federal Government as well as Nigerians of a possible recession, not many took her serious.
To buttress her concerns, Okonjo-Iweala had cited the slide in the price of crude oil as well as the dire economic situation in Spain and Greece as possible trigger for another round of global recess.
The Nigerian economy then begun to experience sluggish growth towards the end of 2015, with the rate dropping to an estimated 3 per cent in December 2015. This led to myriads of economic problems ranging from unemployment to poor economic planning and structure of governance which eventually climaxed into fore warned economic recession in 2016.
Instructively, Nigerians started looking for ways to lessen their financial burdens and in came Ponzi schemes which became an alternative to the harsh economic realities in the country. Investopedia defines Ponzi schemes as investment scams that promote high rate of return with little risk to investors. These returns which are usually short term, are higher than the investments for the sole of enticing new investors. Hence, the success of one ponzi scheme led to the birth of Mavrodi Mondial Moneybox (MMM), iCharity, Zarfund, Twinkas, Ultimate Cyclers and many more others.
According to the annual report of the Nigeria Electronic Fraud Forum which was unveiled in 2017, the Nigerian investing public lost about N11.9 billion to the Mavrodi Mondial Moneybox Ponzi scheme.
Within the last few months, more illegal fund managers have adopted various strategies to collect money from would-be investors. Some of them engage in free seminars at their offices for people to learn more about their products and the money-making business. The Securities and Exchange Commission (SEC) under the current leadership of its acting Director-General, Mary Uduk, has , however, not relented in its efforts at curbing their activities and has gone further to educate and enlighten Nigerians on the dangers of such activities.
For instance, the activities of the SEC Kano zonal office have been impressive in the last few months. Staff of the Commission alongside officials of the Economic and Financial Crimes Commission (EFCC) have visited virtually all major newspapers and radio stations in the metropolis warning innocent Nigerians of the dangers of investing in Ponzi schemes.
Their efforts seem to have paid off as out of the six notable companies that engaged in Ponzi scheme in Kano at the beginning of the year, only one remains open. They are however not open because customers are investing money, but are being besieged by people who want to divest as a result of sustained publicity on the dangers of such patronage. One prominent company, MGB Global , was , around July this year, sealed by the EFCC due to mounting petitions by depositors whose demands for refunds could not be met by the company. The other four too, (Bitcoin company, Money Rite, No Failure Development and X-World, have closed shop due to mounting request by the public to withdraw what was collected from them in the name of investments.
The Commission also sealed off the premises of Dantata Success and Profitable Company Limited in Kano as well as Growing Circle in Lagos for engaging in illegal fund management activities.
According to the Commission, the companies were shut down for carrying out investment operations that fall within fund management without registration with the apex regulator.
The commission had established that their activities also constituted an infraction of the Investments and Securities Act (ISA), 2007. According to SEC, “They do not have registration with the SEC and the Commission has powers according to Section 13 (w) of ISA 2007, to shut down any company carrying out capital market activities without due registration”.
“The mode of operation of the company is that, for a new entrant, registration is N10, 000 and the person is not entitled to products while the second category has a registration fee of N16, 000 that entitles the registrant to receive products.
“For anyone to come under the company, he has to come under an up liner since the company engages in networking business. In the case of Growing Circle, the least stage is a starter point with minimum registration of $50 with an incentive of $15 for a member who introduced two down liners.
For Dantata Success and Profitable Company Limited, the strategy is to solicit for funds from unsuspecting members of the public by enticing them with returns of monthly interest on investment of between 25 per cent to 50 per cent depending on the nature and investment type”.
When Daily Sun asked SEC on how the victims could recover their money, the Commission noted that it verified claims of 4,160 unpaid investors of the illegal investment scheme organised by Dantata Success and Profitable Company. Furthermore, the commission said that the verification exercise which had commenced on Monday July 15 and is expected to last till Tuesday July 30, 2019, with 4,160 investors undergoing verification.
According to SEC , “The investors are required to go along with the original receipts evidencing their payments or bank tellers for deposit into the company’s account, valid means of identification and bank account details.
The commencement of the verification exercise is sequel to the appointment of joint administrators/trustees for Dantata Success and Profitable Company and in pursuant to section 13 and 173 of the Investment and Securities Act, and consequent to an Ex parte Order granted by the Federal High Court, Kano”.
Speaking recently at the third Capital Market Committee (CMC) media briefing in Lagos, Ms Uduk, advised Nigerians to desist from investing their money in investment schemes being operated by persons or organisations that were not registered to carry out fund management functions.
Urging investors to be wary of any investment proposing a return level that was unreasonably high, Uduk advised members of the public to always ascertain whether such fund manager and the products being offered were registered with the SEC while adding that the capital market was properly positioned to provide benefits to Nigerians.
According to her, SEC has been doing a lot in terms of investor education to assist people understand issues surrounding the capital market.
She said, “This is for the all-important purpose of ensuring that the gains of your participation, be these dividends, proceeds from share sales/transfers, etc accrue to you seamlessly without sweat and in the shortest time possible. The purpose is also to ensure that you do not fall victim to the antics of fraudsters who purport to be able to double any amount of money you make available to them as investment value.