ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) on Friday reiterated that registration of a company with the SECP does not permit it to raise illegal deposits and launch fraudulent investments or offer any guaranteed returns on investments on the pretext of investing in real estate schemes.

The SECP has continuously been receiving complaints from individuals, especially senior citizens, who have been deprived of their savings through investments in fraudulent real estate schemes.

In a statement, SECP has said that these real estate investment schemes typically solicit investments from the public by promising lucrative returns.

The perpetrators of these schemes trap investors by displaying the Federal Board of Revenue’s (FBR) national tax number and incorporation certificates of companies registered with the SECP.

The perpetrators raise deposits from hundreds of individuals as investment in a real estate project being developed by promising an unrealistic monthly return.

The funds are usually collected in bank accounts of unincorporated entities controlled by the perpetrators, whereas companies are presented as legal structures to attract investments.

These real estate schemes operate as Ponzi schemes, initially paying returns to early investors before collapsing and depriving other investors of their hard-earned money with no legal recourse for recovery.

The SECP advised the general public to exercise extreme caution and not invest in fraudulent real estate schemes merely based on lucrative monthly profit payments. SECP further clarifies that it does not regulate real estate investment schemes except for Real Estate Investment Trusts.

The SECP has said that any suspicious real estate investment activity should be immediately reported to law enforcement agencies.

Published in Dawn, February 8th, 2025