HAFSAT OLUBUKANLA RUFAI MRS DEPUTY DIRECTOR AND HEAD OF OPERATIONS LAGOS ZONAL OFFICE SECURITIES AND EXCHANGE COMMISSION NIGERIA OUTLINE Learning Objectives About SEC Investor Protection ID: 1029915
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1. THE ROLE OF SEC IN INVESTOR PROTECTION HAFSAT OLUBUKANLA RUFAI (MRS.)DEPUTY DIRECTOR AND HEAD OF OPERATIONS, LAGOS ZONAL OFFICESECURITIES AND EXCHANGE COMMISSION, NIGERIA
2. OUTLINELearning ObjectivesAbout SECInvestor ProtectionHow SEC Protects InvestorsWhat are Ponzi schemes?Differences between Ponzi schemes and legitimate investment schemesAvoid falling prey to Ponzi schemesConclusionQuestions
3. LEARNING OBJECTIVESAt the end of this presentation, participants will be:aware of Securities and Exchange Commission (SEC) and how it protects investorsable to differentiate between Ponzi and legitimate investment schemes
4. ABOUT SEC
5. INVESTOR PROTECTIONThe rationale for investor protection lies in the fact that the “instruments” traded in the capital market are intangible and do not lend themselves to physical examination by buyers.Investment is driven by anticipation of returns from realized earnings and capital growth.Each asset possesses its own unique risk and return characteristics.
6. HOW SEC PROTECTS INVESTORSRule making Empowerment of SROs and Trade GroupsInvestor Protection FundEffective surveillanceOn-site and off-site supervisionInvestigationEnforcement and complianceComplaints Management FrameworkActive websiteReforms
7. WHAT ARE PONZI SCHEMES?Ponzi schemes are fraudulent investment schemes that pay existing investors with funds collected from new investors. They typically appeal to greedy, unsuspecting or naive investors who are promised unrealistically high returns with little or no risk disclosed. Ponzi schemes usually need a constant inflow of deposits to keep operating. When large numbers of existing investors begin to cash out and/or it becomes difficult to recruit new investors, the schemes tend to collapse.
8. DIFFERENCES BETWEEN PONZI SCHEMES AND LEGITIMATE INVESTMENT SCHEMESLegitimate SchemesPonzi SchemesLicensed OperatorsUnlicensed OperatorsRegistered InvestmentsUnregistered InvestmentsAppropriate balance of risk and returnHigh returns with little or no risk disclosedAsset-driven returnsOverly consistent returnsDocumented and explained investment strategiesSecret/Ambiguous/Complex investment strategiesTimely account statementsDelayed or erroneous account statementsNo marketing expectationRequirement to recruit new ‘investors’
9. AVOID FALLING PREY TO PONZI SCHEMESWhile the SEC in collaboration with other regulators in the financial sector strive to clamp down on ponzi schemes, investors also have a huge role to play in helping to curb the activities of these fraudsters.Investors are advised to:confirm if the investment product, scheme or company is registered by the SEC before investing via www.sec.gov.ng or sec@sec.gov.ng review the financial records of the companybeware of promises of high, unrealistic and consistent returnsdiversify investmentsnot rely on reputation or word of mouth alone. Rather, verify the company’s profile and claims over the internet and from regulatory authoritiesunderstand how genuine investments workconsult their investment adviser, stock broker, fund manager, accountant or solicitor for advice
10. CONCLUSIONInvestments enable growth in wealth. So, by all means, you are encouraged to invest.Don’t be careless; before you invest, visit www.sec.gov.ng/cmos to verify that your investment agent is registered by SEC.Investors should be alert and note that if an investment seems too good to be true, it probably is.
11. QUESTIONS