SECP issues regulations to curb Ponzi and Pyramid Schemes

KARACHI (News Desk): The Securities and Exchange Commission of Pakistan (SECP) has taken a major step to prevent Ponzi and pyramid schemes by issuing new regulations.

According to SECP, a clear definition of Ponzi and pyramid schemes has been provided under the new framework.

The regulator said schemes that lure new investors to generate profits for existing investors have been declared illegal. All schemes promising extraordinary profits and recruitment of new members are now banned.

The SECP said online fraudulent marketing schemes will also fall under the purview of the new regulations.

Any scheme offering rewards or incentives for adding new members has been prohibited.

The Commission said the new regulations will be applicable to all companies, including online schemes.

Strict action will be taken against companies found operating illegal schemes, the SECP warned.

The SECP has advised the public to remain cautious of schemes promising guaranteed or extraordinary profits and to verify the credentials of a company before making any investment.