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Nigeria’s SEC moves against investment platforms trading foreign securities

April 9, 2021

Few months after the Central Bank of Nigeria barred banks from allowing cryptocurrency-related transactions in the country, the Securities and Exchange Commission (SEC) has warned capital market operators to stop giving support to online investment trading platforms providing access to foreign securities in Nigeria. SEC said that those securities were not registered in Nigeria, and platforms providing access to them were acting in contravention to existing laws warning capital market operators in partnership with the platforms to desist from providing brokerage services for foreign securities.

Analysts say that this apparent move by the SEC to bar fintechs from selling, issuing or offering for sale foreign securities not listed on any exchange registered in Nigeria will negatively impact thousands of Nigerians who have lately been drawn by technology to investing in foreign securities.

Platforms like Bamboo, Trove, and Risevest that offer Nigerians access to stocks, bonds and other securities in both local and international markets have in recent years grown in popularity in the Nigerian fintech space, especially amongst young people. The investment platforms have worked with local and foreign brokerage firms to provide the services, in a way sidestepping the difficult task of obtaining SEC approval.

It could be recalled that late last year, the SEC tackled Chaka, another investment platform it accused of engaging in investment activities, including providing a platform for purchasing shares in foreign companies such as Google, Amazon, and Alibaba, outside the Commission’s regulatory purview and without requisite registration.

Addressing the issue, SEC said, “The attention of the Securities and Exchange Commission (the Commission) has been drawn to the existence of several providers of online investment and trading platforms which purportedly facilitate direct access of the investing public in the Federal Republic of Nigeria to securities of foreign Companies listed on Securities Exchanges registered in other jurisdictions. These platforms also claim to be operating in partnership with Capital Market operators (CMOs) registered with the Commission.

“The Commission categorically states that by the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth.

“The Commission enjoins the investing public to seek clarification as may be required via its established channels of communication on investment products advertised through conventional or online mediums.”

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry

NIGERIA: Like MMM SEC Warns Again That Loom Money Is A Big Fraud.

May 17, 2019

Loom Money Nigeria is on its first spotlight from SEC, as the Nigerian securities regulator has said that all that glitters may not be gold. In fact, to be sure, SEC used such words as Ponzi Scheme and fraudsters. In a statement, it said:

“If it were a local Ponzi scheme with known offices, it would be very easy for the Commission to seal their offices and freeze their accounts.

Unlike MMM that had a website and the promoter known, the people promoting Loom are not yet known and this pyramid scheme operates through closed groups mainly on Facebook and WhatsApp.’’

The Loom Money Nigeria Warning And Why?

A statement by SEC’s Head of Media SEC said Loom Money Nigeria has taken over the social media.

Warning!

SEC warned that fraudsters are currently running an online investment scheme tagged “Loom Money Nigeria.’’

SEC Lists Out The Targets?

SEC said the scheme targets young people, luring them to participate in a pyramid model of the Ponzi, using such social media platforms like Facebook and WhatsApp. SEC said young Nigerians get lured to invest as low as N1,000 and N13,000 and to get as high as eight times the value of the investment within 48 hours.

SEC said the venture was a Ponzi scheme, where returns would be paid from other people’s invested funds, adding that it had no tangible business model.

“We are aware of the activities of an online investment scheme tagged ‘Loom Money Nigeria,’’ it said. “We therefore wish to notify the investing public that the operation of this investment scheme is not registered by the Commission.”

SEC, therefore, advised the public to avoid committing their hard earned money to the scheme, adding that anyone that subscribed to the illegal activity did so at his own risk.

Loom Money in Nigeria is also known severally as Jack Loom, Catherine Loom, among others, depending on who created the accounts.

Action To Be Taken By Both Sides

SEC, however, assured that an inter-agency committee, Financial Services Regulation Coordinating Committee, was working on the issue, and that the commission was also collaborating with security agencies to track them down.

In 2017, the Nigerian Deposit Insurance Corporation, NDIC, said that an ‎estimated three million Nigerians lost N18 billion in the MavrodiMundial Movement, MMM, ponzi scheme.

From SEC’s statement, it appears that until then, nothing yet is precisely going to loom out of Loom Money Nigeria. So, save your money until then.

Charles Rapulu Udoh

Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.

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