The Securities and Exchange Commission, SEC, has disclosed that over 3 million Nigerians have lost about N18 billion to Ponzi schemes and several other illegal investment schemes.
The Director General of the SEC, Mr. Lamido Yuguda, made these known during the opening of a two-day webinar organised by the Attorney General Alliance-Africa in collaboration with the SEC on Tuesday.
He said: “Ponzi schemes operate with unsustainable operating models that ultimately lead to huge losses for investors. Following the collapse of the MMM Ponzi scheme, the Nigerian Deposit Insurance Corporation (NDIC) had estimated that over 3 million Nigerians lost about N18 billion Naira. Several other illegal investment schemes have cost Nigerians their assets and life savings.”
Mr Yuguda, therefore, described the continued activities of Ponzi schemes as a threat to the protection of investors, the functioning of a fair and orderly financial market, as well as the development of the economy at large.
While assuring the public and relevant stakeholders its efforts towards combating the activities of Ponzi schemes, Mr Yuguda noted that the devastating impact of the COVID-19 pandemic on the Nigerian economy has helped the proliferation of Ponzi schemes.
According to him, other factors included the low-interest rate environment, coupled with the increased use of online services to interact and transact.
The SEC Boss said the Commission’s efforts in addressing Ponzi schemes are therefore geared towards investor protection and preserving market integrity, emphasising that the Nigerian capital market should be a safe destination for investors.
Also speaking, the Attorney General of the Federation and Minister of Justice, Abubakar Malami, said there is no underlying investment for Ponzi scheme.
According to him, Ponzi schemes can never deliver the returns on investment as promised.
Mr Malami stated that they are fundamentally different from legitimate investment opportunities, as the perpetrators are simply fraudsters who take advantage of even the wealthy, intelligent, the sophisticated people.
“They are usually people who are very good at what they do and they thrive on trust and friendship promising easy cash in the short term and financial succour to the naïve.
Recalled that, the SEC DG, Lamido Yuguda has promised that investor protection would be at the centre of the initiatives of the new management warning that any operator that short-changes investors would not go Scott free.