SECP warns investors against Ponzi schemes

Published October 29, 2021
The Secu­rities and Exchange Commi­ssion of Pakistan has time and again clarified that mere registration of a company does not authorise it to raise deposits from the public. — Reuters/File
The Secu­rities and Exchange Commi­ssion of Pakistan has time and again clarified that mere registration of a company does not authorise it to raise deposits from the public. — Reuters/File

ISLAMABAD: The Secu­rities and Exchange Commi­ssion of Pakistan (SECP) has warned the general public against investing in Ponzi and pyramid schemes, multi-level marketing (MLM) and other online schemes which promise high rates of return.

The SECP on Thursday said a company namely “Inter­national Business Solutions (Private) Limi­ted” is prima facie raising illegal deposits from the public by offering profits thereon. It is clarified that the said company does not hold any lice­nce to collect deposits from the public, the SECP said.

Similarly, an online application namely “Barwaqt” is also found involved in offering financing facilities to the general public. To support its illegal activity, the mobile App is purported to be licensed by the SECP. It is hereby clarified that the aforementioned entity is neither registered nor licensed by the SECP.

In view of the foregoing, the public at large is expressly advised to refrain from dealing/investing in these entities. The SECP has initiated legal actions against these entities.

The SECP has time and again clarified that mere registration of a company does not authorise it to raise deposits from the public. It is reiterated that raising unauthorised deposits from the general public, indulging in referral marketing, MLM, Pyramid and Ponzi Schemes are unlawful activities in terms of section 301 of the Companies Act, 2017.

The SECP has made public a list of companies involved in unauthorised business activities such as illegal collection of deposits from investors by making false promises of exceptionally hefty returns.

Published in Dawn, October 29th, 2021

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