The Securities and Exchange Commission (SEC) has reiterated its cautionary stance against investing in unregistered entities promising unrealistically high returns, as it reveals that Nigerians have lost up to N500 billion to Ponzi schemes. Ponzi schemes are fraudulent investment schemes that lure investors with promises of quick and high returns, often by using funds from new investors to pay earlier investors.
Reginald Karawusa, the Executive Commissioner for Legal and Enforcement at SEC, expressed concern during a Senate Committee on Capital Market and Institutions meeting held at the Central Securities Clearing System (CSCS). He lamented the prevalence of illicit activities in the unregulated market, despite the commission’s ongoing efforts to combat Ponzi schemes. Karawusa highlighted that more than 70% of the SEC’s police and enforcement unit’s workload revolves around Ponzi schemes.
Karawusa further revealed that the promoters of these illegal schemes have amassed over N500 billion from unsuspecting Nigerians. To address this issue, he emphasized the urgency for the Senate Committee to expedite the passage of the Investment and Securities Bill. This legislation includes provisions for a minimum 10-year jail term for offenders, which Karawusa believes will act as a deterrent.
The SEC has been collaborating with other government agencies to curb the proliferation of Ponzi schemes and their access to advertising platforms. By working closely with advertising regulatory bodies, the SEC aims to prevent fraudulent investment outfits from deceiving the public through misleading advertisements.
Lamido Yuguda, the Director-General of the SEC, echoed Karawusa’s sentiments, emphasizing the commission’s commitment to combating Ponzi schemes. He highlighted the importance of raising awareness about the risks associated with fraudulent investment schemes and urged the public to exercise caution when approached with offers promising unusually high returns.
In light of the significant financial losses incurred by Nigerians due to Ponzi schemes, the SEC continues to advocate for stronger regulatory measures and enforcement actions. The passage of the Investment and Securities Bill is seen as a critical step towards holding perpetrators of fraudulent investment schemes accountable and safeguarding the interests of investors.
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Ponzi schemes
The SEC remains vigilant in its efforts to protect investors and maintain the integrity of the capital market. Through regulatory oversight, enforcement actions, and public awareness campaigns, the commission aims to mitigate the risks associated with unregistered and fraudulent investment schemes, ultimately fostering investor confidence and market stability.
Source: guardian.ng
