The Securities and Exchange Commission (SEC) has warned Nigerians against investing in Ponzi schemes promising unrealistic returns.
The Director-General of SEC, Lamido Yuguda, gave the warning while addressing Journalists shortly after the Second Capital Market Committee meeting.
Ponzi scheme 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.
The SEC DG urged prospective investors in Nigerians to always check the website of the Commission for list of approved capital market operators before making investment decisions and cautioned the investing public against making hasty investment decisions when the returns on such investment are too attractive.
Yuguda reiterated the commission’s commitment to work with relevant agencies of government and other critical stakeholders in the capital market to tackle the issue of ponzi schemes while urging capital market operators to conduct their businesses within the market functions approved for it by the Commission.
“The Commission will not hesitate to deal decisively with any operator who carries out any activity outside the function approved for it by the Commission. There is ongoing campaign against illegal operators in the capital market, especially Ponzi Schemes and we have adopted multi-level engagements with media platforms and regulators of publicity agencies in order to curb the reach and activities of these illegal operators.” He said.
“While we continue our activities to resolve the complaints that have been forwarded to the Commission through the official channels, it is important to reiterate to the investing public to be wary of unscrupulous schemes that promise unrealistic returns on investment. We will like to use this opportunity to reiterate our commitment towards zero tolerance for market infractions.” Yuguda added.
The SEC DG also disclosed the Commission has approved some derivative contracts and developed the regulatory framework for derivatives trading as well as rules on Interoperability of Central Securities Depositories in Nigeria.
As part of measures to deepen the commodities ecosystem, he stated that the Commission held engagements with the National Insurance Commission (NAICOM) towards de-risking and insuring certain commodity assets, which will attract more investments within the space, particularly from the Pensions industry.
“A technical committee was also constituted comprising representatives of the Commission, Standards Organization of Nigeria (SON), AFEX, Lagos Commodities and Futures Exchange (LCFE) & Nigerian Commodities Exchange (NCX) to deliver agro-based standards within 3 months.”