The Securities and Exchange Commission (SEC) has issued a warning to Nigerians, urging them to refrain from investing in illegal online investment schemes that are being aggressively promoted across various social media platforms. The commission expressed concern over the proliferation of these unregistered platforms, which often exhibit characteristics of Ponzi schemes or other prohibited investment operations.
Public Notice on Unregistered Platforms
In a public notice released yesterday, the SEC highlighted the increasing promotion of unregistered online investment schemes on popular social media applications and websites, including WhatsApp, Instagram, Telegram, Facebook, TikTok, and other digital platforms. The commission noted that many of these schemes display traits typical of Ponzi schemes, while some operators provide unauthorized investment services to the public.
Advice to the Public
The SEC advised Nigerians to avoid investing in any platform that promises unrealistic or guaranteed returns. The commission stated: "Accordingly, the Commission hereby advises the public to refrain from investing or participating in any unregistered online investment platform or scheme promising unrealistic or guaranteed returns."
Additionally, the SEC cautioned members of the public against relying on investment advisories circulated online by unregistered persons or entities. The commission reminded Nigerians that, under the Investments and Securities Act, only entities registered by the SEC are authorized to promote investment services, provide investment advisory services, or solicit funds from the public in the Nigerian capital market.
Key Risks Identified
- Unregistered platforms often operate as Ponzi schemes, using new investors' funds to pay returns to earlier investors.
- Investors face the risk of losing their entire capital when these schemes collapse.
- Unauthorized operators may misuse personal and financial information provided by investors.
The SEC reiterated its commitment to protecting investors and maintaining the integrity of the Nigerian capital market. It encouraged the public to verify the registration status of any investment platform or scheme through the SEC's official website or contact the commission directly for clarification.
