A Ponzi Scheme is a form of fraudulent activities devised by a purported businessman who lures investors and then pays profits to initial investors using the funds obtained from new investors. Investors are led to believe that the profits are made from product sales, stock growth, or other means.  It is named after Charles Ponzi, who became notorious for using the technique in the 1920s. A Ponzi scheme maintains the illusion of a sustainable business attracting investors to believe in the non-existent assets that they claim to own, thereby luring new investors willing to contribute new funds.

The Securities and Exchange Commission (SEC) which is the federal government agency mandated for the regulation and development of the Nigerian capital market,  is appealing to Nigerians to refrain from investing in Ponzi schemes. The Director-general of SEC, Ms. Mary Uduk, spoke out on Wednesday in Port Harcourt, Rivers State, during a town hall meeting organized by SEC  to protect shareholders and other investors from fraudsters and promoters of Ponzi schemes. In her appeal to the country’s people, she stated; “The purpose is also to ensure that you do not fall victim to the antics of fraudsters who purport to be able to double any amount of money you make available to them as investment value. “These fraudsters or promoters of Ponzi schemes are the false prophets of the investment environment; they are the ill wind that blows no good and at whose sight you must flee. “They are to be avoided. This is one message you must take home to family, friends, relations, and acquaintances in order to save them from the agony of loss of their hard-earned money.”

The fight against Ponzi schemes in Nigeria was escalated after the 2016/2017 “MMM” massive Ponzi scheme in the country that caused many Nigerians to lose millions of Naira.

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