The Securities and Exchange Commission, SEC, has warned Nigerians against buying into ponzi or pyramid schemes not approved by the commission.
Mr. Gwarzo said:
“Those pyramid schemes have not been approved by SEC, and we have been telling investors that anybody that is selling any scheme that is not approved by SEC, investors should not buy.
“If they buy, then they are on their own because people are being pushed to buy those kinds of schemes.
“And I think it is also a fault on our own parts because by the time somebody tells you that if you buy this thing you will get 50 per cent discount, you know it is not true.
“So we too as individuals do not have to be greedy, because it is all driven by greed.
“How can somebody give you 50 per cent return? Where is he going to get the 50 per cent from?
“Where is he going to put the money? What is he going to do?
“And this has been the trend that we have seen in recent times and we have been continuously telling people through radio jingles not to accept all those schemes not sanctioned by SEC.”
A Ponzi scheme (also known as a Ponzi game or a Ponzi) is a phony investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate business operations.
A Pyramid scheme is another fraudulent business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products or services.
Operators of such schemes usually entice new investors by offering higher returns and too-good-to-be-true profit margins than other investments.
Ponzi schemes occasionally start as legitimate businesses, until the business fails to achieve the expected returns.
The business then becomes a Ponzi scheme if it continues operating under fraudulent terms.
Beware Of Pyramid, Ponzi Schemes – SEC
The scheme is named after a notrious fraudstaer Charles Ponzi, who used the technique to defraud thousands in the 1920’s.
The SEC DG warned Nigerians not to subscribe to any financial investment plan without first checking the registration status of the operating company on the commission’s website, www.sec.gov.ng.
He added that even if the company was registered with the SEC, potential investors should endeavour to find out from the commission whether the company’s activities have been approved by the commission.
Mr Gwarzo disclosed that the commission was collaborating with the police and relevant law enforcement agencies to check the activities of the operators of such schemes.