The Securities and Exchange Commission (SEC) of Nigeria has issued a renewed warning to the public about the escalating threat of Ponzi schemes, emphasising their detrimental effects on individual investors and the broader financial system.
Dr. Sa’ad Abdulsalam, Head of the SEC’s Enforcement Department, revealed that Nigerians have lost over ₦300 billion to Ponzi schemes between 2017 and 2022. Notably, the collapse of the MMM scheme in 2016 alone resulted in losses exceeding ₦18 billion.
The proliferation of fraudulent investment schemes undermines public trust in formal investment platforms, leading to reduced investor engagement and volatility in the capital market.
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The SEC attributes the rise of Ponzi schemes to factors such as limited financial literacy, the allure of quick returns during economic hardships, and the rapid spread of misinformation through social media.
To combat the menace, the SEC has intensified investor education campaigns, integrated financial literacy into school curricula, and strengthened enforcement measures. The Commission routinely publishes warnings and maintains a public list of licensed operators on its official website to help investors verify the authenticity of any investment offer.
The SEC collaborates with other regulatory bodies, including the Central Bank of Nigeria (CBN), Corporate Affairs Commission (CAC), and Nigeria Deposit Insurance Corporation (NDIC), through the Financial Services Regulation Coordinating Committee (FSRCC) to ensure a unified regulatory response to financial crimes.
SEC’s Advice to Investors:
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Verify Before Investing: Always confirm the registration status of any investment platform via the SEC’s official portal: www.sec.gov.ng/cmos.
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Be Sceptical of Unrealistic Returns: Be wary of investment opportunities that promise high returns with little or no risk.
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Report Suspicious Activities: Promptly report any suspected illegal investment schemes to the SEC for investigation and necessary enforcement actions.
The SEC reiterates its commitment to protecting investors and maintaining the integrity of Nigeria’s capital markets. However, it emphasises that public vigilance and due diligence are crucial in safeguarding against fraudulent investment schemes.
