Charles Ponzi
Why any offer with the word “trading” or “guaranteed” is a Ponzi by Kalu Aja
His offer?
50% in 45 days
100% in 90 days
It was genius. Even if you know it is fake, it only fails if new investors fail to buy in. Thus, the folks in the Ponzi scheme understand it is a Ponzi scheme but retain a considerable incentive to market the fraudulent scheme to others, especially their close friends.
You must understand that if Charles Ponzi had a scheme to make 50% in 45 days, he would not seek investors. Instead, he would go to the bank and borrow billions to invest in his scheme
ANY offer with the words “Trading” and “Guaranteed” is fraudulent. It does not matter if it is currency or bitcoin or stock; it is a fraud
A few tips: Please note I am referring to only offers made to you to invest in securities or a deposit with a promised return, not a business or any other private arrangement
- Company offering must have Securities and Exchange (SEC) Registration. CAC or RC, and even EFCC registration, are necessary but not material regarding investments. SEC registration does not imply infallibility, but NEVER invest in any entity without an SEC license
- The product offered must be SEC-approved. Thus, Company A is offering you to invest N10,000 in “A Power” and get 50% in one week, both Company A and “A Power” must be licensed by SEC
- once a promise is made to repay a fixed sum, you are investing in a bond. Irrespective of what it is called, you are being asked to invest in a bond; thus, ask, “How will the bond be repaid? new sales or funds created to repay?” if new sales, it’s a Ponzi scheme
- The risk-free rate is your guide; the risk-free rate in Nigeria is the rate the Federal Government is borrowing at. Its currency is about 17 to 25% depending on tenor. The “stronger” the institution, the lower the difference between their offered interest rate and Risk-Free Rate. A Ponzi scheme has a vast difference between its offer and the FGN risk free rate. if you see offers of 50%, that’s almost double the risk free rate; thus, ask questions (or run)
- There is no insurance for loss of investment returns. Any offer offering you “insurance” or guarantee against loss is fraudulent
- Write your checks in the name of the company or product offered to you. I prefer checks or transfers because it has a paper trail; NEVER pay cash to invest, if you transfer or write a check, include a memo on what the check is for
- always ask for a prospectus and read it, especially the risk section. If the company asking you to invest has no Prospectus for the offer, that is a red flag
- if you have received an offer from an entity to invest in a security or product and you want to find out if the company is legal, you can look up their registration on the SEC website here: https://sec.gov.ng/cmos/. If you have an offer, you can also screenshot it and DM me, and I will let you know if the company or offer passes the smell test. Please note that I can’t advise if the offer is investible; I am just verifying the entry is registered and not fake. I can’t look at private arrangements or offer to invest in a business or private equity
- there are no friends in investing; in God we trust, and everyone else must bring financial statements
- Last piece of advice: don’t be greedy. If it looks too good to be true, it probably is; if you are unsure, then make sure you don’t invest what you can’t lose
Good luck
