SEC declares ‘Loom Money’ illegal outfit
•Encourages regularisation of multiple accounts
The Acting Director-General, Securities and Exchange Commission (SEC), Ms. Mary Uduk, has raised an alarm over the activities of some internet fraudsters, who are currently running an online investment scheme tagged, ‘Loom Money Nigeria’.
The illegal investment outfit is taking over the social media by targeting young people to participate in a pyramid scheme.
Uduk stated this during a press conference by the Minister of Finance held in Abuja, recently.
Uduk, who was represented by the Acting Executive Commissioner, Operations of the SEC, Isyaku Tilde, warned the general investing public that the fraudsters carry out their illegitimate business activities via social media platforms like Facebook, and Whatsapp luring young Nigerians to invest as low as N1,000 and N13,000 and get as much as eight times the value of the investment in 48 hours.
She noted that the venture had no tangible business model, describing it as a Ponzi scheme, where returns would be paid from other people’s invested funds.
“Unlike MMM that had a website and the promoter known, the people promoting Loom are not yet known, and this pyramid scheme operates through closed groups mainly on Facebook and Whatsapp. If it were a local Ponzi scheme with known offices, it would be very easy for the Commission to seal their offices and freeze their accounts.
“We therefore wish to notify the investing public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi scheme, where returns are paid from other people’s invested sum. Also, its operation is not registered by the Commission.”
Uduk, therefore, advised the general public to distance themselves from the scheme, adding, “Please note that anyone that subscribes to this illegal activity does so at their own risk.”
She also assured that an inter-agency committee, Financial Services Regulation Coordinating Committee (FSRCC), is working on the issue and collaborating with security agencies to shut them down.
The Loom Pyramid Scheme is not new to the world. Last month, Daily Mail UK, reported that the scheme has resurfaced online all over the world, with different names such as ‘loom circle’, ‘fractal mandala’, and ‘blessing loom’.
In Nigeria, its central name is Loom Money Nigeria, with individuals creating their own WhatsApp groups such as Jack Loom, Catherine Loom, and a host of others.
On regularisation of multiple accounts by investors, Uduk said the process is still on-going, and urged affected investors to do so before the deadline.
Uduk said: “The Capital Market Community has opened a forbearance window to allow investors with multiple subscriptions/applications to public offers to regularise these subscriptions under a single account name. Investors who provide sufficient proof of ownership will be permitted to regularise their accounts into one.
“There is absolutely no punishment attached to it, the SEC is not punishing anybody, and we just want such individuals to come and regularise that transaction between now and 31st December 2019. The objective of implementing this is to increase liquidity in the market so the investors can also claim the dividends for their investments.
“The shares are just there no trading on them, not only that, the investors cannot claim their dividends too and that increases unclaimed dividend. Let them come and regularize so that there will be increase in trading of those shares, and they will also claim their dividends so that the balance of unclaimed dividends will also go down.” Uduk added.
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