The regulatory authority of the securities sector in Ghana, Securities and Exchange Commission (SEC), has been charged to be proactive in the performance of their role of monitoring Capital Market Operators both existing and up-coming to reduce the number of ‘Ponzi´ schemes infiltrating the country.
Richard Kumadoe, a Security and Anti-fraud expert gave such advice to the Securities and Exchange Commission when commenting on the recent public interest warning issued by the Commission to inform the general and investing public to desist from transacting business with CHY Century Heng Yue Group Limited/Sairui e-commerce Ghana Limited, an international shopping site which originated from China in 2008.
The Security and Anti-fraud expert further asserted that the Commission’s primary role as a regulator for the securities market is to act as a check on businesses that operate in their sector to ensure they are running activities in accordance to the law and not to close down businesses.
As such in the performance of their duties, the Securities and Exchange Commission must put in place proactive policies and perform due diligence on such individuals and businesses to ascertain their legitimacy to protect and prevent innocent Ghanaians from losing their monies to fraudulent persons and businesses from falling victims to ‘Ponzi’ schemes.
“The monitoring department of SEC needs to beef up their work and investigate these ponzi schemes and protect the state. In this case, the state is the Ghanaian people. Better monitoring obviously leads to proactiveness and saves the ordinary Ghanaian from losses”.
A ‘Ponzi’ scheme, in simple terms is a form of fraud in which the success of an unlicensed enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors hence those at the tail end up losing all their monies.
In this case the Commission seems to be reactive in their monitoring because the general and investing public get affected by such schemes losing all their monies before such matters are dealt with.
For instance, CHY Century Heng Yue Group Limited/ Sairuie-commerce Ghana Limited was launched in Africa as one of the e-commerce business sectors that runs on a trading system called ‘new retail’ on 29th March 2019 with its head office in Accra, Ghana, meaning they have been in operation for two years.
Meanwhile, the Securities and Exchange Commission is now cautioning the general and investing public that the company has not been licensed to carry out any Capital Market activity including investing or trading for returns as mandated by Section 3 of the Securities Industry Act, 2016 (Act 929) and as such should be considered as a fraudulent organisation.
One of the best ways for the Securities and Exchange Commission to be proactive is for them to automate their monitoring, Mr. Kumadoe opined adding that “If this is done, the Ghanaian will not be duped because the Commission will immediately identify a ponzi scheme when it springs up and nip it in the bud”.
Finally, in his concluding remarks, Richard Kumadoe intimated that the name of the company CHY Century alone gives the firm away as a ponzi scheme.
“Any financial firm with a funny name and gives high interest rates is highly probable to be a ponzi scheme,” he added.
