Many investors patronising Ponzi schemes in Nigeria seem to be ignoring the obvious “red flags” raised by the promoters, in their quest for the promised above-average returns, which ordinarily defy market trends and signal potential fraud.
Ponzi schemes are ‘investment’ schemes that promise unrealistic returns, which ordinarily should be treated with caution.
The merchants target greedy investors in their push to grow their pyramid schemes which pay returns to their investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources.
“It is important to checkmate the trend to protect innocent Nigerians from losing their hard-earned savings to these rising portfolio investment platforms, whose mission is to defraud innocent people through all sorts of attractive and, many a time, unrealistic promise of high returns, even as they deceive people with some initial commitment that can never be sustained”, Abiola Rasaq, a financial analyst, told BusinessDay.
As at third-quarter (Q3) of 2021, Nigerian investors lost over N300 billion to Ponzi schemes across various platforms in the country, operated by fake capital and financial market operators, Akin Adeniyi, president of Association of Corporate and Individual Investment Advisers president, said during a recent webinar.
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