ponzi

Kenyans have lost over  Sh1 billion buying into unregulated investment products marketed by entities promising high returns.

The Capital Markets Authority (CMA) says investors have been constantly complaining of loss of funds through online forex frauds, illegally pooled funds, cryptocurrency, real estate and Ponzi schemes, ordered refunds and instituted criminal charges.

They lure unsuspecting investors across the country promising huge returns of up to 20pc, the CMA says.

“The total number of individual investors that have lodged complaints with the Authority in the different unregulated products that have been investigated is approximately 500 with a sum total of over Sh1 billion,” CMA chief executive Wyckliffe Shamiah told the National Assembly Finance Committee.

Most unregulated products are operated in obscurity and deal in products that resemble securities or capital market instruments. The regulator says it has acted on cases from public reports and those it identified through its market intelligence.

The CMA hosts a whistleblower portal available on its website that enables members of the public to anonymously report any suspicious activity within the market

Mr Shamia says the most common fraud reported were online forex schemes where unregulated firms present themselves as brokers and collect money from the public for buying currencies online.

Foreign-based firms also trick Kenyan investors, asking them to send their money to offshore accounts for buying and selling currencies, shares, commodities and metals like gold online, but fail to wire back the proceeds when they want to cash out.

The markets regulator has in the past named Iforex time, Trends Forex Traders, AutoTrade Markets, Everjoy Forex Institute, Interweb Global Fortune and Thika Forex Trading Lounge among 40 online forex traders under probe for operating without a licence.

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He said others like County Capital were operating fund management services without a licence and was reported by a client who could not get her Sh4 million back.

Last year, financial sector regulators, including the Central Bank of Kenya, the CMA and the Retirement Benefits Authority, warned of a rise of fraudulent and unregulated schemes.

Some firms, including Women Investing in Entrepreneurship, Winnas Sacco and Choice Microfinance, were raising capital from the public by issuing shares without the regulators’ nod while Wiseman Talent Ventures was selling cryptocurrency Kenicoin through a public offer promising 10 per cent return.

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Nigel Jr.
As a tech enthusiast and expert, Nigel Jr. is dedicated to providing in-depth and insightful content on all things technology. With a background in online journalism, product reviewing, and tech creation, Nigel has become a trusted source for all things tech.

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