SEC DG, Arunmah Oteh
By Goddy Egene
A total of N106.941 billion is trapped in Ponzi schemes otherwise known as ‘wonder banks’ across the country, the Head of Department, Enforcement and Compliance at the Securities and Exchange Commission (SEC), Mr. Eric Elujekor has revealed.
Elujekor, who stated this in his paper: “Addressing the challenges of Ponzi schemes and other scams in the capital market,” at the SEC Journalists’
Academy last Friday in Abuja, said the funds were trapped in 36 illegal capital market operators.
While these funds have been trapped for over five year, he said investors have not been able to receive the funds due pending litigations against some of the operators.
He explained that most of the fraudulent schemes sprang up during the boom in the capital market between 2005 and early 2008.
“In the height of the capital market boom of 2005 to 2008, many fraudulent investment schemes sprang up. Both informed and ignorant investors fell for the attractive returns offered by the promoters. At the crash of the capital market in 2008, SEC was inundated with complaints by investors who had lost money,” he said.
According to him, the amount was ascertained after depositors made claims against the illegal operators to the Inter-Agency Committee on Illegal Fund Managers/Wonder Banks that was set up in 2008. The committee, he said, comprised the Central Bank of Nigeria (CBN), SEC, Nigerian Deposit Insurance Corporation (NDIC), Corporate Affairs Commission, Economic and Financial Crimes Commission (EFCC) and the Nigeria Police.
“The objectives of the committee was to fashion out modalities and pursuing case against companies which SEC had sued at the Investment and Securities Tribunal (IST); put in place mechanism for enduring inter-agency collaboration to prevent the re-occurrence of wonder banks in future and set up procedures for establishing extent of activities of the illegal operators and modalities for recouping the funds trapped for the benefit of the those involved,” he said.
Giving a breakdown of the claims from depositors, Elujekor said 560, 882 depositors made N106.941 billion against 440 companies.
He added that the 440 companies, 36 of them with value of N100 million and above accounted for N104.954 billion. He noted that Nospectco Oil and Gas accounted for the highest amount of N48.9 billion. Wealth Solutions Limited followed with N21.5 billion, while New Freedom Diversified Investment Limited trailed with N7.8 billion.