The Securities and Exchange agency (SEC), which recently revealed that Nigerians lose up to N500 billion to Ponzi schemes, has once again cautioned the country’s citizens against investing in companies that offer irrational returns and are not registered with the agency.
Ponzi schemes are fraudulent schemes that use the distribution of rapid returns to initial investors from funds contributed by subsequent investors to instill confidence in the success of a fictitious business.
During a courtesy visit to the Central Securities Clearing System (CSCS), Executive Commissioner Reginald Karawusa of the SEC’s Legal and Enforcement division bemoaned the existence of numerous illicit activities in the market, despite the commission’s attempts to tackle Ponzi scheme issues. He was responding to questions from the Senate Committee on Capital Market and Institutions.
He claims that Ponzi schemes account for more than 70% of the cases handled by the SEC’s police and enforcement unit.
He revealed that the individuals behind these illicit groups had raised over N500 billion from Nigerians.
In order to guarantee that those responsible for the act are brought to justice, he emphasized the necessity for the Senate Committee on Capital Markets and Institutions to use all of its authority to ensure that the Investment and Securities Bill receives prompt assent.
He claimed that the bill’s minimum 10-year prison sentence will force the organizers of these illicit groups to give up the act.
According to Karawusa, the SEC has been collaborating with other organizations and government authorities to limit Ponzi schemes’ access to different advertising platforms.
“We are closing these illegal outfits and fighting the Ponzi scheme, which we recognize as a problem.”
“To ensure that approvals are not granted to individuals who would come to deceive the public, we also join the advertising board.”
Lamido Yuguda, the SEC’s director general, stated that the agency has been warning the public about the rise in dishonest investment companies and has been waging a fierce struggle against Ponzi schemes.
