The Securities and Exchange Commission (SEC) has charged members of the public to report any fund manager that is operating without the registration of the Commission, in a to ensure that only registered entities are allowed to operate in the capital market
Chief Economist, SEC Dr. Okey Umeano made the remark in an interview with journalists, stressing that the battle against illegal fund managers must be tackled on all fronts.
Umeano noted that the new Investments and Securities Bill (ISB) has amended some of the provisions around Ponzi schemes, illegal fund managers, and certain unwholesome practices in the market to ensure that these practices no longer happen.
He said, “This ISB is supposed to accommodate these new operators, these new instruments and new happenings in the market.
“The Act is now more up to date and in line with recent happenings in Nigeria and the global level. This Act also protects the investors more because we have made certain provisions in that Act that strengthens the SEC to ensure that they are better able to carry out their investor protection activities.
“Among other provisions, the bill prohibits the operation of Ponzi/pyramid schemes and other illegal investment schemes while prescribing a jail term of not less than 10 years for promoters of such schemes. This will strengthen regulation on Ponzi schemes. We are going to go all out against the promoters of such Ponzi schemes,” he added.
According to Umeano he has gone through the marketing literature of some of the Ponzi scheme operators where they promise investors 10%, 20% in a month, which he stated is unreasonable urging investors not to patronize them.
“When it is too good to be true and it sounds too good to be true, it is probably not true. There is a simple way to find out as the SEC website has a list of registered capital markets operators. Go to the SEC website type in ‘CMO search’ and you will see a list of capital market operators that are registered and that are regulated.
Umeano added, “There is also another one that some of them started doing, the organisation is registered but they now create a side product that is not registered. We register both the organisation and the products, check properly before parting with your hard earned money.
“In the capital market, we do not allow capital market operators to promise fixed returns. Nobody knows what the market will give, people will make some efforts but nobody can for sure tell you I will make 10% or 20% every month for you.
“When people tell you if you bring in money, I will pay you this amount but you have to bring in other people, you have to register other people, they are most likely to be using the money of those people to pay you, using your own to pay the person who brought you in, and that becomes the pyramid in Ponzi schemes work,” he said.
Umeano therefore urged investors to be very cautious when the juicy returns are sold to them, urging them to contact the SEC via email at sec@sec.gov.ng or through the telephone as well as social media platforms to ascertain the registration status of such entities.
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