The Securities and Exchange Commission (SEC) has raised the alarm over the activities of illegal fund managers whose operations have defrauded unsuspecting Nigerians of their hard earn money.
The commission said the line of trade of the illegal fund managers, which are known as Ponzi scheme in the developed market, was usually tinted with promises of high returns on investors.
It will be recalled that a total of N106.941 billion is trapped in Ponzi schemes otherwise known as ‘wonder banks’ across the country
According to the Head of Enforcement and Complaint at the commission, Mr Eric Elujkor, he said Nigerians must be sceptical of any scheme that requires new investors to pay existing investors.
Elujkor, who listed some of the schemes’ stages to include, fraudsters and/or distributors marketing directly to investors; fraudsters may engage in high profile activities; publicised philanthropy, new investors joining scheme to generate successful cycles even as they keep this aspect of the scheme alive for years through various strategies.
The enforcement and complaint officer who listed the illegal fund managers as one the bane of the near crash of the stock market in 2008, noted that the commission had since filed action against 32 of the fund managers/wonder banks at the Investment and Securities Tribunal (IST).
“In the height of the capital market boom of 2005-2008, many fraudulent investment schemes sprang up. Both informed and ignorant investors fell for the attractive returns offered by the promoters. At the crash of the capital market in 2008, SEC was inundated with complaints by investors who had lost money,” he added.
Meanwhile, the Inter-agency committee on illegal fund managers/wonder bank which comprised of the CBN, SEC, NDIC, CAC and EFCC has total claims submitted against 440 companies being 560,882 for a total amount of N106.9 billion.
Elujkor in his paper, ‘Addressing the challenges of ponzi schemes and other scams in the capital market,’ presented recently at the SEC journalist award, said “of the 440 companies, 36 of them with value of N100 million and above accounted for N104.954 billion.
According to him, the 36 illegal operators and claims against them are: Nospectco Oil and Gas, N48.9 billion; Wealth Solution Ltd, N21.5 billion; New Foundation Diversified Investment Ltd, N7.8 billion; Sefteg Nigeria Company Ltd, N4.34 billion; Treasure Line Interlink Ltd, N2.938 billion; Pennywise Royal Ltd, N1.93 billion; Wealth Zone Ltd, N1.8 billion; Wisdom Investment Ltd, N1.77 billion; Silver Trust Global Investment Ltd, N1.6 and Wealth Gate Multibiz, N1.576.
Others include; Real and Coll Wealth International, N1.327 billion; Divine Success Merchandise Ltd, N1.204 billion; Flagship Asset Managers Ltd, N1.191billion; CyberWealth Internationa,l N956.5 million; Open Gate Cooperative Investment, N752.9 billion; Wealth Creation International, N567.1 million; Positive Movement, N502.9 million and Success Point International Investment, N417.7 million, amongst others.