Upsurge in activities of illegal fund managers worry SEC
Nigeria’s Securities and Exchange Commission (SEC) has said that the upsurge in the activities of illegal fund managers in recent times has become worrisome.
This was stated by the Head, Office of the Chief Economist of the SEC, Dr Okey Umeano, during an interview in Abuja.
Umeano assured investors that the SEC is working hard along with other government agencies to reduce the activities of illegal fund managers to the barest minimum.
Investor education: He restated the Commission’s commitment to continue to educate and enlighten investors in a bid to ensure they make informed investment decisions. Umeano said:
- “This is an area that we are doing a lot and still have a lot to do. If you look at the Capital Market master plan, you will see that a lot of the things we want to do revolves around investor education. In investor education, what we tell investors is how to know who is genuine and it is very simple.
- “Just go to the sec.gov.ng you can just on the search portal type CMO. The search portal comes out and you type the name of the firm marketing to you if it is not there then it is not registered with SEC which means you are not protected. You are not covered by that investor protection that I am talking about. Those who are marketing financial products, investment related financial products must come to SEC and be registered”.
Enforcement exercises: Umeano disclosed that to further protect investors, the Commission has been carrying out enforcement exercises against these illegal fund managers and would continue to do so. He said:
- “We have been going around closing Ponzi schemes and all those illegal fund managers and you know we have been on different stations. I have been on several TV stations, radio, and in newspapers talking about this. We are about to launch a few billboards around the country saying these same things. Nigerians must understand that the money that they are giving people is difficult to get.
- “It is difficult to raise capital and before you give it to someone, it is important to know that person is the right person. This they can easily ascertain by going on our website. That is the message.”
He stated that the Commission has a police Unit that assists in investigating these entities and carrying out enforcement actions when the need arises, while also collaborating with relevant government agencies like the Nigeria Financial Intelligence Unit and the Economic and Financial Crimes Commission.
Problem with Ponzi: Umeano noted that the problem with Ponzi schemes is that they use the money from Mr A to pay Mr B and use Mr B’s own to pay Mr C.
- “And while they are paying all that, they are taking their own so by the time we close them, there’s not enough money again to return to the people whose money they took. You also know they promise outrageous returns and these returns are paid to the first people.
- “We have a few now that we are trying to resolve but I must tell you that it is difficult for anyone who has put money in a Ponzi scheme to recover much. Nigerians must understand it is not nice. If anyone promises you a return too good to be true, then it is probably not true,” he said.
Umeano, therefore, urged Nigerians to be vigilant and carry out their due diligence by visiting the Commission’s website to ascertain the registration status of the entities before investing, adding that there is also a need for them to understand the products they are investing in to obtain desired returns on their investments