• Thursday, November 30, 2023
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Is solution on sight for victims of Ponzi scheme?


Without wide consultation, you may not know that their mission is just but fraudulent. If they come asking you to invest with the promise of higher rates of return with little risk to you, beware they could be Ponzi scheme generating returns for older investors by acquiring new investors.

This scam actually yields the promised returns to earlier investors, as long as there are more new investors who usually suffer the losses as these schemes collapse on themselves when the new investments stop. Most of such schemes that operated in Nigeria may have succeeded in the past, but the trust is that their havoc remains with their investors.

Some businessmen in South-East were victims

Where is Mega Assets Management? Tell Mega Assets to pay us our money. We need our money back from Mega Assets. They came to us to invest in their scheme, and before we could notice it, they closed shop. We have gone to their office, we couldn’t see anybody. Even their employees don’t know their where about. We are talking about Mega Assets. A lot of people have died because of money they invested in Mega Assets.

These among others were the heart touching words Onitsha traders repeatedly said when the Securities and Exchange Commission (SEC) took its investors’ outreach to the commercial city of Anambra State, last year.

These investors could not hide their feelings as they intermittently interrupted proceedings of the investors outreach programme on the grounds that the SEC must assure them that the company would be brought to book.

One thing unknown to these victims was that they patronised a scheme that was not registered with the SEC as a market operator. Apparently, such investors’ desire to invest and earn big; their lack of thorough analysis/understanding of the capital market, and ignorance of market related information contributed in making them victims of this Ponzi scheme.

How do these investors feel?

While narrating their ordeal with the wonder bank, the investors who were mostly traders, said: “For over three years that we invested our money in one of the illegal fund managers, named Mega Assets Limited, we have not received any information from the company. Our money running into millions of naira is still hanging and no dividend or any other form of returns have been paid. However, we have gone to the company’s office and behold the place was locked with keys and nobody could be traced.”

These are some of the investors’ words: “So, when we heard that SEC was holding an investors’ outreach, we came to narrate our ordeal and see how the Commission can help us to recover our money. Now, we were told that the Mega Assets was not registered with the Commission. How can we invest money in the Nigerian capital market when we don’t know the outcome of the former one we invested?” some of them had queried, amid their efforts in approaching the Economic and Financial Crimes Commission (EFCC) to assist them recover their money.

Capital market apex regulator’s view

Worried by these complaints, and in line with her usual way of frowning over any form of market infraction, Arunma Oteh, director-general, SEC, assured these investors, who are mostly traders, that the Commission will ensure that justice prevailed. Oteh also used the forum to warn the Onitsha investors not to patronise non-registered capital market operators to execute their investment needs, warning investors to be wary of people who come to them offering mouth- watering returns not tenable.

The director-general, while giving the warning, also said, “the Commission does not recognise non-registered capital market operators who they don’t have their track record and may not be able to prosecute in case they go against the rules and regulation guiding the capital market. Investors should patronise registered capital market operators that are duly registered by SEC, Nigerian Stock Exchange (NSE) and also are licensed by the Institute of Chartered Stock Brokers (CIS).

“If you want to invest in the mutual funds, make sure you verify from the Commission if such operator is duly registered. Just visit our website to know if such operator is registered or come to our office either in Onitsha or Abuja.

“The Commission had in the past issued public notice, warning investors on the activities of wonder banks. You should spend little money to read papers on daily basis so that you can get information about businesses in which you had invested millions of naira. The SEC is the apex capital market whose primary role is to regulate and develop the market. It has responsibilities to protect investors and that is why we are advising them to patronise registered capital market operators that we can easily apprehend whenever they defraud investors or commit other malpractice. We have dragged some of them to Investment and Securities Tribunal (IST) so that they can be punished for defrauding innocent investors.”

While explaining the fraudulent practices in the country, she said “a Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organisation.”

Renewed moves by capital market apex regulator

Recently, the SEC confirmed that there were over 483 complaints already laid by investors against Mega Assets, and the hearing of the case which is to be determined by the newly reconstituted Administrative Proceedings Committee (APC) of the SEC holds respectively on July 2 and 3.

The hearing of the case is between SEC and Mega Assets Managers Limited (first respondent), Adedapo Adelaja Solanke (second respondent), Olufunmilayo Aderonke Solanke (third respondent), Adebayo Olusegun Victor (fourth respondent), Esiaba Iheanyi Alozie (fifth respondent), and Olusola Raimi Osolola (sixth respondent).

According to the SEC, “following the conclusion of investigation by the SEC into the affairs of Mega Assets in respect of illegal invitation to the deposit monies and alleged conversion of clients funds and other violations of the Investment and Securities Act 2007, SEC rules and regulations 2000 as amended and the code of conduct for capital market operators and their employees, the matter has been referred to the Securities and Exchange Commission’s Administrative Proceedings Committee SEC APC for determination.”

To the capital market apex regulator, “provisions of the Investment and Securities Act (ISA) 2007 and SEC rules and regulations allegedly validated are Section 67 (1) ISA 2007; Rules 191 SEC rules and regulations 2000 as amended; Rules 43 SEC rules and regulations 2000 as amended; Rules 49 (i) SEC rules and regulations 2000 as amended; Article 1(i) and (iii), 2(i) and (iv) of the code of conduct for capital market operators and their employees; and Article 5 of the code of conduct for capital market operators and their employees.”