Uche Usim, Abuja
The Securities and Exchange Commission, SEC, on Sunday, said it was more determined than before to crack down on illegal fund managers and ensure they are made to face the full wrath of the law.
Acting Director-General of SEC, Mary Uduk, who stated this in an interview with journalists in Abuja at the weekend, said what the SEC had done apart from continuing to educate people, is to also go after the promoters of these schemes.
“we are stepping up our enforcement mechanisms to ensure that they are apprehended and their offices sealed off. So many of them are being prosecuted in courts, we have secured convictions for some, and we have closed down so many. We verify ownership and return monies collected by them to the owners. It’s a problem around the world and we can tackle the problem by educating the public, telling them the right investments to make and the right places to put in their money.
Ponzi scheme (also a Ponzi game or a Ponzi) 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.
Uduk however advised the investing public to be wary of any investment that is proposing return levels that are unreasonably high and advised investors to ensure that the fund managers and the products they are offering are registered with the commission.
“So when people come to you and say that you can invest N50,000 today and in two hours, you will get N200,000 or get 50 per cent in two hours, know that it’s is a lie. No legal investment that pays investment that way. So what they must likely be doing is using your money to pay someone else and using someone’s money to pay you. It’s important that we don’t engage in such investments.
“These fraudsters or promoters of Ponzi schemes are the false prophets of the investment environment; they are the ill wind that blows no good and at whose sight you must flee. They are to be avoided. This is one message you must take home to family, friends, relations and acquaintances in order to save them from the agony of loss of their hard-earned money.”
According to Uduk, such ventures have no tangible business model, as returns would be paid from other peoples’ invested funds, making it a fraudulent investing scam.
The SEC boss, who restated the commission’s resolve to make the capital market more user-friendly to boost investors’ participation in the market, said the commission had been doing a lot in terms of education to increase investors’ knowledge of the capital market and enable them make informed investment decisions.