In
order not to fall prey to capital market scammers, the Economic and
Financial Crimes Commission has released a red alert information to
Nigerians.
Men of the Economic and Financial Crimes Commission
Members of the public have been warned by the Economic and
Financial Crimes Commission about a new tactics unscrupolous individuals
are now using to con and deceive people in the capital market.
Read below the official statement from the EFCC:
"Red Alert On Capital Markets Scam
The general public has been urged to be acquainted with recent
trends in Capital Markets related fraud. Until recently, Capital Markets
scams usually involved transfer of shares from one Stock broking house
to another one of the syndicate fraudster’s choice where the shares are
fraudulently sold without the knowledge of the real owner.
It also involved stealing of share certificates, stealing of
dividend warrants and clearing them through a fraudulent bank account
opened in the name of the original owner. The fraudsters usually target
accounts which have been dormant for a long period as well as shares of
deceased investors. This fraud is carried out in connivance with a
syndicate at Nigerian Stock Exchange/Central Securities Clearing System
and Registrars of the Companies whose shares are traded.
Sometimes the scammers lodge the cheques issued to them by the
stock broking firms and clear them through Microfinance banks. The
Microfinance banks are currently being used by these fraudsters because
they are not yet compliant with the Bank Verification Number system.
In recent times, one of the new modes of fraud in the Capital
Markets is Portfolio Management Scams. Under this method, the investor
is persuaded to release his shares to the stock broking firm hoping to
receive the promised returns which the stock broking firm may not
honour.
Meanwhile all the shares of the investor will be sold by the
stock broking firm and the proceeds used for other personal interest,
making it difficult for the stock broking firm to buy back the shares
for the investor when required.
This is similar to Ponzi Schemes in which the fraudster
promises their target huge returns as interest on their money. The only
difference is that under Portfolio Management, the investors’ releases
his/her shares to be sold by the stock broker, while in a pure ponzi
scheme, cash is paid to the fraudster.
Adesola Kolawole Amusan, Head, Capital Markets and Insurance
Unit, Economic and Financial Crimes Commission, EFCC, who threw light on
this scams, strongly recommended that members of the public should
regularly log into the websites of Nigerian Stock Exchange –
NSE(www.nigeriastockexchange.com), Securities and Exchange
Commission – SEC (www.sec.gov.ng), and Central Securities Clearing
System – CSCS(www.cscsnigeria.com) to verify the status of any Stock
Broking Firm whether the firm is registered or under suspension, before
subscribing to any of their offers.
Further to this, he warned investors not to give their hard
earned money to any individual or company that promises to turn their
money around within a short period with a guarantee to pay them huge
returns that are in excess of the average returns in the financial
system.
He also advised the shareholders to obtain and fill a trade
alert form with the CSCS which will enable them to receive “alerts” any
time there is a transaction on their stock broking accounts.
Amusan appealed to the Central Bank of Nigeria (CBN) to
consider bringing Micro Finance Banks to comply with the Bank
Verification Number (BVN) scheme so as to curtail fraud still being
perpetrated through them so as to bring an end to the practice of
fraudulent clearing of cheques."
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