SEC expresses alarm over rise in unlicensed fund managers

SEC reports the Islamic financing market has reached $2.9 billion

The Securities and Exchange Commission (SEC) has raised worry over the development of illicit investment firms as well as the prevalence of illegal fund manager operations.

According to Dr. Okey Umeano, head of the SEC’s Office of the Chief Economist, the Commission is concerned about the rise in recent years in the activities of illicit fund managers.

However, he gave stakeholders assurance that the commission will step up efforts to educate investors about issues relating to the capital market and collaborate with other governmental organizations to scale back their activities to a minimum.

“This is an area that we are doing a lot and still have much to do. If you look at the capital market master plan, you will see that a lot of the things we want to do revolve around investor education. In investor education, what we tell investors is how to know who is genuine and it is very simple.”

“Just go to the sec.gov.ng you can just on the search portal type CMO. The search portal comes out and you type the name of the firm marketing to you. If it is not there then it is not registered with the SEC, which means you are not protected. You are not covered by that investor protection that I am talking about. Those who are marketing financial products, investment related financial products must come to the SEC and be registered”.

According to Umeano, the Commission has been engaging in enforcement actions against these illegitimate fund managers and will keep doing so.

He said, “we have been going around closing Ponzi schemes and all those illegal fund managers and you know we have been on different stations. I have been on several TV stations, radio, and in newspapers talking about this. We are about to launch a few billboards around the country.”

“It is difficult to raise capital and before you give it to someone, it is important to know if the person is the right person. This they can easily ascertain by going on our website. That is the message.”

He explained that the Commission works with relevant government organizations like the Nigeria Financial Intelligence Unit and the Economic and Financial Crimes Commission, as well as a police unit that assists in investigating these entities and carrying out enforcement actions when necessary.

“The problem with Ponzi schemes is they use the money from Mr. A to pay Mr. B and use Mr. B’s to pay Mr. C. ,While they are paying them, they are taking their margin so that by the time we close them, there is no enough money to return to the people whose money they took. You also know they promise outrageous returns and these returns are paid to the first set of investors.”

“We have a few now that we are trying to resolve but I must tell you that it is difficult for anyone who has put money in a Ponzi scheme to recover much. Nigerians must understand it is not nice. If anyone promises you a return too good to be true, then it is probably not true.”

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