How Nigerians Lost N281.1bn To Ponzi Schemes Despite Govt’s Warning- SEC

The Securities and Exchange Commission has said that over N281.1bn has been lost by millions of Nigerians to Ponzi Schemes.

It, however, said efforts have been made to clampdown on the promoters of such dubious schemes.

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The Commission disclosed this on Tuesday during a Webinar on Ponzi Schemes organised by the Attorney General Alliance Africa in collaboration with the Securities and Exchange Commission.

The Commission described as unfortunate the huge loss suffered by millions of Nigerians to Ponzi Schemes despite the current economic hardship.

According to the SEC, N900m was lost by over 2,000 investors to Yuan Dong Ponzi, N7bn was lost to Galaxy Transport Ponzi Scheme, while N2bn was lost to Famzhi Interbiz Limited. It said the schemes are currently under investigation by the SEC Police unit.

The Commission revealed that investors have lost a lot of their hard earned money to Ponzi Schemes.

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It said, “Nigerians who invested in Cowlane lost N100m and Dureil N100m. For MMM that operated between 2015 and 2016, 3 million Nigerian investors lost N18bn, Nospecto investors lost over N106bn.

“The current Ponzi Scheme that is under our investigation now is the grand-daddy of them, we will not be able to disclose the name of that scheme because it is still under investigation and that one is estimated to have collected over N147bn.

“So, 2019 and 2020 last year there are online ponzi schemes which are under the investigation of the SEC.

“Some of those who have suffered from these schemes have been heartbroken, some have committed suicide.”

The SEC Director General, Lamido Yuguda, said the devastating impact of the Covid-19 on the Nigerian economy led to the rise of online service to interact and carry out transactions.

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This, he noted has led to the proliferation of Ponzi Schemes in Nigeria.

He added, “Ponzi scheme operators have capitalised on the harsh economic climate to offer unrealistic investment returns to new investors.

“These illegal schemes have also swindled investors and expanded their operations through the increased use of the continued activity of Ponzi Schemes as threat to the protection of the investors.”

He said the activities of Ponzi Scheme operators undermines regulatory efforts and negatively impact investors in the Nigerian capital market.

Yuguda said, “The Commission’s efforts in addressing Ponzi Schemes are therefore geared towards investor protection and preservation of market integrity.

“We will continue to apply innovative measures to combat the activities of ponzi schemes.”

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The SEC DG lamented that one of the challenges it suffers is with the justice system. The regulator cited instances where Ponzi Scheme operators were acquitted despite evidence provided by the commission.

Reacting to the threat of Ponzi Scheme, the Attorney General of the Federation and Minister of Justice, Abubakar Malami said, “These Ponzi Schemes cost both the investors and the economy in general and every nation’s financial market as they are operated illegally and they can wreak havoc through their reach as enabled by technology.”

The AGF said the Investment and Securities Act that sets out the powers and functions of the SEC needed to be strengthened.

He said the problem is not about the lack of laws but the effective administration of these laws.

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