The Securities and Exchange Commission has expressed fresh concerns over Nigerians’ appetite for investing in Ponzi schemes despite the availability of safer, regulated investment products.
The Head of the Enforcement Department at the SEC, Dr Sa’ad Abdulsalam, made this observation on Thursday at the Capital Market Enlightenment Programme organised for the Capital Market Correspondents Association of Nigeria at its Lagos office.
The SEC said that about three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement, aka MMM, crashed in 2016. As of 2022, Nigerians had lost over N300bn in Ponzi schemes in five years, according to a report generated by the Norrenberger Financial Investments scheme.
While speaking on the need for greater public awareness and due diligence in investment decisions. Abdulsalam noted that many Nigerians continue to fall victim to fraudulent schemes in search of unrealistic returns despite the numerous legitimate investment vehicles approved and supervised by the Commission.
“There are many credible products for people to invest in,” Abdulsalam said. “If you want a safe environment to invest in, you can invest in mutual funds. But most people are looking for very high returns. That is why I see people patronising the Ponzi schemes.”
He explained that the SEC continues to register fund management companies who, in turn, are expected to develop products that undergo regulatory vetting before being offered to the public.
He added that there were also non-interest funds for those who prefer them: “There are non-interest funds, Islamic mutual funds. They are there, and there are many. Just go to the internet; you will find them, you will see them, and you will see who is promoting those products.”
Abdulsalam advised potential investors to verify the legitimacy of investment offerings and promoters through the Commission. “Check and confirm: is the person a registered operator? And if you want to confirm, send us an email. We will tell you the status,” he added.
He noted that the proliferation of fraudulent investment schemes continues to erode public trust in formal investment platforms.
“The erosion of market confidence caused by Ponzi schemes leads to significant volatility and reduced investor engagement,” he said. “The fallout not only damages individual finances but also tarnishes the reputation of regulatory institutions tasked with protecting investor interests.”
Beyond the capital market, Abdulsalam emphasised that the social and economic consequences of Ponzi schemes are far-reaching. Household financial losses, often involving life savings or borrowed funds, intensify socio-economic stress and threaten community cohesion.
“These losses are not just figures on a balance sheet,” he explained. “They represent broken trust, devastated livelihoods, and increased poverty in affected communities.”
The SEC official also warned against the misuse of Special Control Unit Against Money Laundering certificates, which some operators display to falsely imply legitimacy. He clarified that the certificate, which bears the logo of the Economic and Financial Crimes Commission, is intended for anti-money laundering compliance and not as a business licence.
“Because the certificate carries EFCC on top, most believe they can use it to give a colouration of legitimacy to their business. EFCC does not know about them. SCUML is just a unit,” he said, noting that some businesses frame the certificate and display it in their offices to deceive clients.
Abdulsalam revealed that the SEC is in discussions with the EFCC to reconsider the format of the SCUML certificate, suggesting a more secure system such as digital codes or verification numbers.
The Commission reiterated its commitment to investor protection and urged the public to remain vigilant, always confirming the authenticity of any investment product before committing funds.
