Securities and Exchange Commission (SEC) has intensified its crackdown on ponzi and pyramid schemes as it revealed that Nigerians have lost over N500 billion to these criminals masquerading as investment firms.
The Commission, while reiterating commitment to its role of investor protection, warned potential investors and the discerning public to desist from putting their money in ponzi schemes or any investment platforms that offer unrealistic Return on Investments (ROI).
Reginald Karawusa, the Executive Commissioner, Legal and Enforcement at SEC, while responding to the Senate Committee on Capital Market during a recent courtesy visit to Central Securities Clearing System (CSCS), highlighted the urgency of the situation, emphasizing that cases of Ponzi schemes comprised more than 70 per cent of the SEC’s enforcement caseload.
“We have always done our best to enlighten the public on the approved and legitimate market, which is the capital market. Sadly, there are a lot of activities going on in the illegitimate market.
More than 70 per cent of the case load of the police unit force of the SEC is on Ponzi schemes. And the market capitalization or better still the amount that these illegal operations have mobilized from the public is more than N500 billion.”
He underscored the imperative for a legislative action, urging the Senate Committee to expedite the passage of the Investment and Security Bill, which proposes severe penalties for perpetrators of Ponzi schemes, including a minimum 10-year jail term and total forfeiture of ‘ill-gotten gains. Ponzi remains illegal, we have shut down many and we will continue to shut them down.”
In addition, Karawusa stressed that the Commission was collaborating closely with the Advertising Standards Board, by scrutinizing misleading advertisements promising unrealistic returns on investments.
Concerns were raised regarding the appeal of illegal markets fueled by perceptions of elitism within the capital market. “Many Nigerians, particularly those in the real sector, feel marginalized from traditional investment avenues, making them susceptible to ponzi schemes promising quick gains.
“If Nigerians are well enlightened on how the capital market operates and the many benefits therein, they would not fall prey to the ponzi schemes out there promising unrealistic quick returns.”
The committee emphasized the importance of bolstering outreach efforts to educate and engage SMEs, bridging the gap between the capital market and the real economy.
