Renewed appeal for desperate Nigerians – New Telegraph

Some Nigerians have continued to look at Ponzi schemes and wonder if banks are the quickest way out of trouble even though they have been defrauded at different times despite warnings from regulators. Reports by RHODA OGUNSEYE

Nigerians over the years have shown that they have a high appetite for high risk and high return regardless of the lack of business model inherent in most of their investment choices; always ready to rush into the next get rich schemes. Despite the depressing experience of the Mavrodi Mundial (MMM) movement in 2016 and 2017, where investors lost an estimated N12 billion, according to the Central Bank of Nigeria (CBN), some Nigerians are still looking for the next Ponzi scheme to invest in .

Definition of Ponzi

Senior Partner, Laurel Francis & Associates, Ms. Anastasia Braimoh speaking during a session at the 16th Annual Business Law Conference of the Business Law Section of the Nigerian Bar Association (NBA -SBL) held recently in Abuja, said everyone knows what a Ponzi scheme is, but the problem is identifying it. She said: “Basically a Ponzi scheme is a scam, it’s just stealing from Peter to pay Paul. We all know what a Ponzi scheme is, but identifying it is the problem. “Even the teachers have been duped, the scholars have also been duped.” Speaking about the characteristics of a Ponzi scheme, she said: “First of all, it is an unregistered scheme which is not regulated; it’s illegal, but the only legality it has is that it has registered as a business with CAC. Apart from that, it is not regulated by any regulator and that should be a red flag. “The business will offer a very attractive return on investment. When a company offers you an unrealistic return, which does not correspond to a conventional investment, it is a red flag. “The structure can be complex and they use strong-sounding words. They also attract investors by making the entry amount very low. She said it was important to note that a company could start a business legitimately and go illegal. “They can register with regulators and at some point in operations it becomes an oonzi system and as an investor you have to be very vigilant and aware because it’s your responsibility to protect your own investment,” she says.

Growing concern from regulators

The development is already a headache for the Securities and Exchange Commission (SEC). The Chief Executive of the Commission, Mr. Lamido Yuguda, said that the SEC will continuously cooperate and engage the relevant agencies to completely eliminate all Ponzi scheme operations in the capital market. Yuguda said the SEC had waged a serious war against Ponzi schemes and had engaged and alerted Nigerians to the need to only deal with operators registered with the Commission. According to him, “we have their list on the SEC site and we have always said that if you go to a trader or when a trader approaches you, you must confirm that he is an authorized trader with the SEC. “We have our numbers on how to reach our offices in the areas and we have done a lot of outreach in terms of seminars and webinars, all with the aim of discouraging people from going to Ponzi schemes. “Unfortunately a lot of people continue to run these Ponzi schemes, we have had cases reported to us, our law enforcement department and police unit have been on many of these cases which have brought us been reported trying to solve them.” Yuguda pointed out that it is not very difficult to identify a Ponzi scheme because they usually promise unreasonably high returns just to lure people in. He said: “I would like to take this opportunity to say that it is not very difficult to recognize a Ponzi scheme and that the people who opt for the Ponzi scheme are probably aware that there is a type of risk that they take, because when someone tells you I will pay you 10% per month on your investments, that means if you invest 1 million naira each month you get 10% of that which is N100,000.00. something like that, it’s probably Too good to be true. Because when you dial in the annual rate of return, you find out that it’s way above what any decent investment can give you. “There are people who think they can be among the first in and probably get out before it collapses, but you may be taking a huge risk because you don’t know if you’re the first. , maybe the 1000th and could be it’s your own money that could be trapped. It is important that investors understand the telltale signs of a Ponzi scheme and alert the Commission if they need clarification.”


The CEO of the SEC revealed that the Commission was working with other government agencies to reduce the access of Ponzi schemes to advertising platforms, print or electronic media, i.e. radio and television. television. He said: “These collaborations are very important because Ponzi schemes are cancer for the capital market; a lot of money has been lost and it is unacceptable that people continue to have these kinds of investment losses. “In terms of synergies between the Commission and law enforcement in the fight against Ponzi schemes, I can say that there is a very good synergy and harmony between the SEC and law enforcement. “There worth mentioning that the SEC has a Nigerian police detachment that works directly with the Commission on capital market matters including ponzi schemes and we have good collaboration with the Nigerian Financial Intelligence Unit, the EFCC, particularly on tackling money laundry and Ponzi schemes.Yuguda said the Commission has stepped up clarification on Ponzi schemes to ensure the message gets to the streets, while also working with various states, local governments and different government agencies, including non-governmental organizations, to make sure the message reaches every nook and cranny of our country “This is something that pri ve a lot of hard-earned household money. Money that could be used for many other meaningful activities and needs is now basically given away to fraudsters. “When they come to you to try and convince you, they actually come in the form of very honest people, making all sorts of promises to you in terms of financial return, but once they get your money, the story is starting to change,” he noted. He reiterated the Commission’s commitment to continue its efforts and fulfill its mandate of protecting investors and creating an enabling environment for market operations.

Quasi-legal regime

The Commission is also concerned about crowdfunding platforms for unregistered investments. He expressed concern that despite warnings, some investors continued to patronize unregistered investment crowdfunding platforms, warning investors against this activity. Crowdfunding is the process of raising funds to fund a project or business from the public through an online platform. Crowdfunding portal is a website, portal, intermediary portal, application or other similar module that facilitates interaction between fundraisers and the investing public.

In a circular issued on August 3, 2022, the SEC said it has observed with concern the fraudulent activities of certain unregistered investment crowdfunding platforms and strongly advises investors against making investments with or through a crowdfunding platform. participatory not registered with the Commission. .

The Commission said that in recognition of the potential and importance of crowdfunding platforms and the need to protect investors through effective regulation, it published its crowdfunding rules in January 2021 and asked funding platforms well-meaning participatory organizations to register with the Commission and comply with the rules. by June 30, 2021. According to the circular, “The Commission, by this circular, hereby notifies the general public and operators of unregistered crowdfunding platforms, that the operation of any crowdfunding platform which is not registered with the Commission is illegal and may result in prosecution of such operators and loss of investment by their customers.” Members of the public are further advised to confirm the registration status of any entity seeking their participation in any investment program by contacting the Commission through its website:, email: [email protected], telephone number: 09-4621168.” The Commission had, as a matter of recently published on crowdfunding, said: “A proposed rule has been developed to provide a regulatory framework that allows private companies to have the structure and mechanism necessary to raise r capital from the public through crowdfunding.” He noted that Micro, Small and Medium Enterprises (MSMEs) incorporated in Nigeria with a minimum of two years of operational experience should be eligible to raise funds. via a commission-registered crowdfunding portal. According to the Commission, the total fees payable to parties to a crowdfunding issue should not exceed 2% of the total funds raised. The Commission noted that the maximum amount, which could be raised by an average company, should not exceed N100 million. “The maximum amount that can be collected by a small business must not exceed 70 million naira and the maximum amount that can be collected by a micro business must not exceed 50 million naira. “The limits set out above do not apply to MSMEs operating as digital product investment platforms or other MSMEs that may be designated by the Commission from time to time,” he said. .

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The Commission explained that retail investors cannot invest more than 10% of their annual income in a calendar year.


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