INTERVIEW: Greed Pushing Many Nigerians Into Ponzi Schemes– SEC DG

Despite repeated warnings by the Securities and Exchange Commission about the dangers of Ponzi schemes, many Nigerians keep patronizing the illegal fund managers thereby losing huge funds in the process.

Under the infamous Mavrodi Mundial Movement (MMM) that operated between 2015 and 2016, three million investors lost N18bn. Nospecto investors also lost over N106bn within the same period.

Similarly, speculators lost N900m to Yuan Dong Ponzi while Galaxy Transport Ponzi schemes defrauded victims of N7bn with N2bn also lost to Famzhi Interbiz Limited. Nigerians who invested in Cowlane and Dureil also lost N100m to each of the outfits.

In this chat with Ifeanyi Onuba and Kasarachi Aniagolu, shortly after the Capital Market Committee Meeting, the Director-General of SEC, Lamido Yuguda, spoke on the negative impact of Ponzi Schemes on the capital market and steps being taken by the Commission to check the menace among other issues in the capital market. EXCERPTS…

The Securities and Exchange Commission has been working towards reducing the huge amount of unclaimed dividend, to what extent has the intervention of the Commission assisted in reducing this?

The number of unclaimed dividends we had at the end of last year was about N177bn, so unfortunately this was an increase over the number at the end of 2020. The Commission has done a lot one of which is that we are working the Registrars of Companies to ensure that dividends are now distributed electronically through the bank accounts of our investors rather than through dividends warrant that use to be the case.

The problem is that people need to mandate their account, you need to provide your account details first so that the Registrars can credit your accounts directly with these dividends. And we have observed that there are issues with that process and unfortunately, you will still need to go to each and every registrar and you need to give the same information. So, right now, what we are trying to do is that we are trying to get to a one point where people can supply this information so that when shareholders give them to a Registrar, they do not need to repeat that information to other Registrars.

The second thing we have done is with enlightenment. You know people need to be enlightened. Many changes have happened and is currently happening in the capital market and the fact that many people have not mandated their account simply means that many people are not aware. As I have said earlier of this e-dividend mandate management system, all those company that have changed their names, so many people are unaware and if they are having papers that reflect the older company, they will be confused as to where they will go to update their information.

What we are doing is trying to create more awareness since the capital market is organized so that investors can get their dividends back.

Despite some of the enforcement actions taken by SEC, Nigerians are still falling victim of Ponzi Scheme, why have we not won this fight?

The Commission has already been fighting and we are in a very serious war with Ponzi scheme, we have been alerting people and announcing that you only deal with official Registrars of the Commission. We have always said if you go to an operator or an operator approaches you, you must confirm that this operator is a licensed officer of the commission.

You know we have our numbers how to connect to us, we have our offices in the zonal centers, and we have done a lot of sensitizations in terms of summit, webinars all trying to discourage people from going into Ponzi scheme. Now unfortunately a lot of people are still patronizing this Ponzi schemes, we have had cases that have been reported to us, our enforcement department and police unit have been really on many of these cases and trying to resolve the issues of investment that have been lodged.

I want to use this opportunity to say that it’s not really very difficult and the people who go to these Ponzi schemes and many of them are properly aware that there are certain risks attached to this scheme. Because when somebody tells you, I’ll pay you ten per cent per month on your investment, which means that if you invest N1,000,000 every month you will get N100,000 as interest, if you see something like this then it’s probably too good to be true. If you compound the annual rate of return then it’s way higher than every decent interest on return. Now there are people who want to go in and probably go out before it collapses. You may be taking a huge risk because you do not know whether you are maybe the first or last or maybe it’s your own money that will hang.

I think it is very important for our investors to really understand the science of Ponzi scheme and to alert the Commission if they really need some clarity of how to know or detect Ponzi Scheme. You don’t need to visit us, you just need to contact us, WhatsApp us or email us or visit any of our offices closest to you.

What is the level of synergy between SEC and the law enforcement agencies to ensure that people who have defrauded Nigerians through Ponzi schemes are brought to book?

We have a very good synergy between us and the law enforcement agencies. We do know that the SEC has a large attachment between us and the police and that they have really been working closely between themselves on different matters including Ponzi scheme and we have good collaboration with the Nigerian Financial Intelligence Unit, the Economic and Financial Crimes Commission, especially on the fight against money laundering, Ponzi scheme.

So, the collaboration between us is very strong. We are always talking between ourselves, and with other organizations that help control our internet system because you will still see a lot of advertising of Ponzi scheme on these platforms. We have a very strong collaboration and we are engaging continuously with these agencies because they have a common goal as we have which is to eliminate completely Ponzi scheme operations in our environment

There are many Nigerians in the grassroots who may not have access to emails and WhatsApp, what steps is the SEC taking to ensure that these categories of people are also enlightened and don’t fall prey to Ponzi Schemes?

We have been working with other agencies of the government in terms of really reducing the access of Ponzi scheme through the advertising platforms that we have. Whether it is the internet, print media, electronic media, radio and television. This is really important because Ponzi schemes are really like a cancer to the capital market, a lot of money has been lost and it’s really unacceptable that we will continue to have this kind of events.

We have also been working with various bodies to really make sure that our message gets to the street, I know that we are on the board of the Advertising Practitioners’ Council, we have the council because we need the council to know the concerns of the capital market on this issue.

We have recently signed a Memorandum of Understanding with the Lagos State Advertising Authority on having billboards at various strategic places in Lagos state warning our citizens about the ills and dangers of Ponzi scheme. These are things we are doing, and we will continue to cut across the entire length and breadth of this country, state government and local government, agencies of government and also to Non-Governmental Organizations to make sure that these messages really get to the nukes and crannies of this country.

This is really something that has been depriving a lot of household money, money that could be used to do a lot of other meaningful activities and needs are now really surrendered to fraudsters essentially. You know when they come to you trying to convince you, they actually come in the form of honest people. Giving you all sorts of promises in terms of financial returns, but when they collect your money, the story begins to change.

The ten-year Capital Market Master Plan (2015-2025) is being reviewed, what is the rationale for this review and to what extent will the revised version impact positively on the capital market?

The revised capital market plan, as we said this masterplan will be presented at the next Capital Market Committee meeting. But essentially, what has happened at the revised master plan is a ten-year document and it has been around since 2015, and you can agree with me between 2015 and now a lot of assumptions used in designing the first masterplan have actually changed.

So, this mid-term review will make sure that the assumptions that we will use should be relevant in the next five years. And that the structure of the capital market and the modern world as we know today has also significantly changed from what we have in 2015. So, it is all these new things that have been put into the revised masterplan to make it more relevant and to allow the commission to achieve the goals of the capital market as quickly as possible.

Some people are of the view that the e-dividend initiative of SEC is being frustrated, is the Commission aware of this and what steps are being taking to ensure that the programme is not sabotaged?

In terms of the e-dividend, I think I have mentioned this and its works through varieties of sanctions and the capital market operators know that. So, we have therefore said that whoever that is frustrating the d-dividend management system will actually face disqualification and sanctions.

Recently, you made a proposal to the Minister of Finance for the exemption of Corporate Bonds from tax payment. What was the reason for this proposal and what is it meant to achieve?

For any asset class, the investments whether investors invest in that asset class or not, it is strictly a function of many considerations and tax is only one part of these considerations. Although it’s only one, it is also very important especially if the tax rate is very high. You have to consider liquidity as a consideration, return, risks, you have the time horizon of the investors, you have liquidity preference of the investor. Tax is a very important aspect of the consideration and we are currently working with relevant authorities to advocate for that return to the status quo (tax exemption on bonds).