Nigeria Bust Chinese Ponzi Scheme. Arrest Operators. Nigeria’s Securities and Exchange Commission, SEC, has arrested the promoters of illegal Chinese investment company, Yuan Dong. The Commission said operating offices of the company in Abuja, Asaba and Kano have already been sealed. The spokesperson of the Commission, Naif Abdussalam, said the arrest of the operators, and sealing of their offices, was in furtherance of the regulatory agency’s determination to rid the country’s capital market of illegal operators. SEC said the company, whose presence was predominantly in Asaba, Kano and Abuja, has been parading itself as an investment company and has been sending invitations to unsuspecting members of the public to subscribe in a scheme identified as a Resources Investment Account.
Under the scheme, SEC said, investments ranged from a minimum deposit of ₦10,000 to a maximum deposit of ₦240,000 over an investment period of a minimum of 30 working days to a maximum period of 10 months. Interest rates offering on short and medium term basis included promises of a daily profit of ₦80.00 and ₦2,400, depending on the category of investment.
The Commission said the company had also enticed its unsuspecting customers with payment of bonuses should they convince more investors to invest in the scheme.
Following reports on the exploits of the company, the Commission said it conducted an investigation, which established that its activities constituted a breach of the Investment and Securities Act (ISA), 2007.
SEC said it also discovered that contrary to their supposed existence in over 20 locations across the country, the company only had functional offices in Asaba, Kano and Abuja.
“The promoters of these illegal operations have since been arrested by the Nigeria Police Force and are undergoing interrogation,” SEC spokesperson said.
Mr. Andulsalam said the Commission had notified the investing public that the company was not licensed to carry out investments business of any sought; and as such its operations were illegal.
“Consequently, pursuant to the Commission’s non-tolerance policy of unhealthy practices in the market, the general public is hereby informed that in exercise of its powers enshrined in Section 13 (w) of the ISA 2007, the Commission “Sealed Up” the premises of the company on Thursday, February 23, 2017.
“This action became necessary to completely put an end to the unlawful activities of the company against unsuspecting investors,” the SEC spokesperson stated.
While the Commission reiterated its commitment to sanitise the Nigerian capital market of all illegal operators, it advised the investing public to exercise due diligence and caution in the course of making investment decisions. Valid licenses of lawful operators can be obtained on the Commission’s website, while members of the public are advised to confirm the licenses of firms they intend to carry investment activities with the Commission,” the spokesperson said.
In recent times, the Nigerian investment public has been inundated with various supposed financial and investment companies that entice the people with huge interest pay offs on investments far beyond the rates approved by the SEC and the Central Bank of Nigeria, CBN.
One of the most prominent of such has been the MMM, which has since folded up along with customers’ investment capital and interests.