Home NewsBusiness Who Can SAVE Investors From Ponzi Schemes, Illegal Funds Managers?

Who Can SAVE Investors From Ponzi Schemes, Illegal Funds Managers?

by Anita Ogona

All over the world Nigerians are known as smart people. Doing business in Nigeria could come with lots of challenges especially from employees, suppliers trying to cut corners to subvert or undermine the goals of the organization for their selfish goals. Many businesses have witnessed the rise and fall syndrome due to the activities of fraudulent persons within the organization, while some closed shops other simply struggle to swim above water levels.

Life in Lagos is said to be on the fast track, everyone seems to be in a hurry while the fast ones try to obtain money from unsuspecting members of the public through cajole, false pretense, deceits, lies, and tricks, others simply adopt quick rich mechanisms idea to sell to the public and ultimately scam and extort the people at will and run off with their fortunes to begin a life at the detriment of people who had sometimes borrowed such funds .


In the last five years, Nigeria has made progress in capital market development. The menu of available asset classes has been expanded to include Exchange Traded Funds and the market infrastructure has been modernized and strengthened with the platforms for over-the-counter now established.

The Securities and Exchange Commission has undertaken a number of initiatives to boost investors’ confidence including the establishment of the National Investors’ Protection Fund meant to cushion the adverse effect of losses suffered in the capital market and the e-dividend policy designed to minimize cases of unclaimed dividend.

Other initiatives are the Direct Cash Settlement scheme, which ensures that investors receive their money directly whenever securities are sold; the corporate governance scorecard for companies listed on the Nigerian Stock Exchange and the recapitalization of capital market operators.

While these are encouraging developments, the country’s investment climate is beginning to witness a rise in illegal fund managers. According to the annual report of the Nigeria Electronic Fraud Forum which was unveiled in 2017, the Nigerian investing public lost N11.9bn to the Mavrodi Mundial Moneybox Ponzi scheme popularly known as MMM.

Within the last few months, more illegal fund managers had adopted various strategies to collect money from would-be investors.

Some of them engage in free seminars at their offices for people to learn more about their products and the money-making business.

After the seminars, they solicit for funds from unsuspecting members of the public by enticing them with returns of monthly interest on investment of between 25 per cent and 50 per cent.

They also indicate a registration period of between one and two weeks and issue numerous notices directing all prospective customers to make deposits into their bank accounts.

In recent weeks, two of such fund managers have been sanctioned by SEC with their offices sealed for contravening the Investments and Securities Act of 2007.

The two companies whose offices were sealed by the commission for engaging in illegal fund management activities are Dantata Success and Profitable Company Ltd in Kano and Growing Circle in Lagos.

SEC said the companies were shut for carrying out investment operations that fell within fund management without registration with the regulatory body.

The commission said it had established that their activities also constituted an infraction of the Investments and Securities Act 2007.

The mode of operation of the company is that for a new entrant, registration is N10,000 and the person is not entitled to products while the second category has a registration fee of N16,000 that entitles the registrant to receive products.

“For anyone to come under the company, he has to come under an up liner since the company engages in networking business.

“In the case of Growing Circle, the least stage is a starter point with a minimum registration of $50 with an incentive of $15 for a member who introduced two down liners.”

The management of SEC said that the closure was to end unlawful activities of the companies against unsuspecting investors and, therefore, urged investors to ensure that they only dealt with

Speaking on the activities of illegal fund managers, the acting Director-General, SEC, Ms Mary Uduk, urged Nigerians to stay away from fake financial experts who would promise to double their money within a short time.

She said that the commission was committed to sensitizing investors and protecting them from the antics of fraudsters, especially promoters of Ponzi schemes.

Uduk said, “We want to ensure that people do not fall victim to the antics of fraudsters who purport to be able to double any amount of money you make available to them as investment value.

“These fraudsters or promoters of Ponzi schemes are the false prophets of the investment environment; they are the ill wind that blows no good and at whose sight you must flee. They are to be avoided. This is one message you must take home to family, friends, relations and acquaintances in order to save them from the agony of loss of their hard-earned money.”

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