As an investor ( especially for newbies), it's important to stay informed about your rights and responsibilities.
Here are some the most frequently asked questions (FAQs) about investing in securities in Nigeria .
1. How am I Protected an an Investor?
Investors in Nigeria’s capital market are protected through regulations and oversight provided by the Securities and Exchange Commission(SEC) Nigeria, which serves as the apex regulator of the Nigerian capital market.
The SEC ensures that the market operates in a fair, transparent, and orderly manner, helping to safeguard investors from fraud, malpractice, and unethical conduct.
Investor protection is achieved through several key mechanisms:
-Registration of Market Operators : All capital market operators including asset managers, brokers, and investment advisers must be registered and licensed by the SEC before they are allowed to operate. This ensures that only qualified and compliant institutions participate in the market.
-Regulatory Compliance and Rulemaking: The SEC establishes rules, guidelines, and regulatory frameworks that market participants must follow. These regulations promote transparency, accountability, and proper market conduct.
-Monitoring and Supervision: The Commission continuously monitors the activities of market operators to ensure compliance with established regulations and to detect any irregular or unethical practices.
-Investors Protection Fund (IPF): The Investors Protection Fund (IPF) was established to provide compensation to investors who suffer financial losses due to the negligence, insolvency, or malpractice of licensed market operators.
2. How can I invest in Money Market Funds (Trade or Buy Shares/Stock/Commercial paper) ?
To invest in Money Market Funds or other money market instruments, the first step is to work with a licensed capital market operator. In Nigeria, only firms that are registered and authorized by the regulator are permitted to offer investment products to the public.
You should therefore check the list of companies that have been registered and licensed by the SEC Nigeria before investing.
These licensed firms may include:
-Asset management companies
-Stockbrokers
-Investment advisers
-Fund managers
Note: Working with a regulated and licensed market operator helps ensure that your investment is properly managed and protected under Nigerian capital market regulations.
Investors should always ensure that the investment firm are properly licensed and in good standing with SEC. It is important to regularly verify that the licenses of market operators are valid and have not expired or been revoked.
Staying vigilant and confirming the current regulatory status of an investment firm helps investors avoid fraudulent schemes and ensures that their investments are handled by authorized and compliant market operators.
Click on this link to find registered and Licensed market operators by SEC Nigeria: https://sec.gov.ng/for-investors/find-a-registered-operator/
3. What Steps Can I Take to Recover My Dividend, Bonus, or Share Certificates?
If you are experiencing issues with receiving your dividends, bonuses, or share certificates, you can take the following steps:
- Confirm the Share Purchase :Verify with your stockbroker that the shares were purchased as instructed.
-Contact the Registrar: If the shares were purchased, contact the registrar responsible for the company’s share register to resolve issues relating to dividends or share certificates.
-Lodge a Complaint with the Regulator: If the issue is still not resolved, you may submit a formal complaint to the Securities and Exchange Commission Nigeria for further investigation and assistance. It's advices you physically visit their office. Check SEC Nigeria contact office: https://sec.gov.ng/about/contact-us/
4. What Is a Ponzi or Pyramid Scheme?
A Ponzi or pyramid scheme is a fraudulent investment scam that promises unusually high returns with little or no risk.
Instead of generating profits from legitimate investments, the scheme pays returns to earlier investors using money collected from new investors. This creates the illusion of a successful investment.
However, the scheme eventually collapses when it can no longer attract enough new investors to continue paying returns. When this happens, most investors lose their money.
Note: These fraudulent companies are becoming innovative with their scheme. BE ALERT!!!
5. How Can I Identify a Ponzi Scheme?
Investors should watch for the following warning signs:
-The company is not registered with the regulator: The company or promoters do not appear on the list of licensed capital market operators published by the Securities and Exchange Commission Nigeria.
-No legitimate investment activity: The scheme does not invest in real assets or legitimate financial instruments capable of generating the promised returns.
-Dependence on new investors: Returns paid to earlier investors come directly from money contributed by new investors.
- Unrealistically high returns: The scheme promises returns that are far higher than normal market rates, often exceeding benchmark interest rates set by the CBN.
MMM, CHINMARK, CBEX promised their investors outrageous high ROI( Return on Investment) of 30% - 100%. Always check the market rates on ROI to avoid falling a victim!!
-The use Known promoters (Influencers): The individuals promoting the investment ponzi schemes are known to the investing public and often provide little verifiable information about their operations and mouth watering promises. In Nigeria, some of these investment scammers use influencers to promote their products and high rates of ROI to unsuspecting investors.
As a new investor, always do your research before you invest.
Here are some the most frequently asked questions (FAQs) about investing in securities in Nigeria .
1. How am I Protected an an Investor?
Investors in Nigeria’s capital market are protected through regulations and oversight provided by the Securities and Exchange Commission(SEC) Nigeria, which serves as the apex regulator of the Nigerian capital market.
The SEC ensures that the market operates in a fair, transparent, and orderly manner, helping to safeguard investors from fraud, malpractice, and unethical conduct.
Investor protection is achieved through several key mechanisms:
-Registration of Market Operators : All capital market operators including asset managers, brokers, and investment advisers must be registered and licensed by the SEC before they are allowed to operate. This ensures that only qualified and compliant institutions participate in the market.
-Regulatory Compliance and Rulemaking: The SEC establishes rules, guidelines, and regulatory frameworks that market participants must follow. These regulations promote transparency, accountability, and proper market conduct.
-Monitoring and Supervision: The Commission continuously monitors the activities of market operators to ensure compliance with established regulations and to detect any irregular or unethical practices.
-Investors Protection Fund (IPF): The Investors Protection Fund (IPF) was established to provide compensation to investors who suffer financial losses due to the negligence, insolvency, or malpractice of licensed market operators.
2. How can I invest in Money Market Funds (Trade or Buy Shares/Stock/Commercial paper) ?
To invest in Money Market Funds or other money market instruments, the first step is to work with a licensed capital market operator. In Nigeria, only firms that are registered and authorized by the regulator are permitted to offer investment products to the public.
You should therefore check the list of companies that have been registered and licensed by the SEC Nigeria before investing.
These licensed firms may include:
-Asset management companies
-Stockbrokers
-Investment advisers
-Fund managers
Note: Working with a regulated and licensed market operator helps ensure that your investment is properly managed and protected under Nigerian capital market regulations.
Investors should always ensure that the investment firm are properly licensed and in good standing with SEC. It is important to regularly verify that the licenses of market operators are valid and have not expired or been revoked.
Staying vigilant and confirming the current regulatory status of an investment firm helps investors avoid fraudulent schemes and ensures that their investments are handled by authorized and compliant market operators.
Click on this link to find registered and Licensed market operators by SEC Nigeria: https://sec.gov.ng/for-investors/find-a-registered-operator/
3. What Steps Can I Take to Recover My Dividend, Bonus, or Share Certificates?
If you are experiencing issues with receiving your dividends, bonuses, or share certificates, you can take the following steps:
- Confirm the Share Purchase :Verify with your stockbroker that the shares were purchased as instructed.
-Contact the Registrar: If the shares were purchased, contact the registrar responsible for the company’s share register to resolve issues relating to dividends or share certificates.
-Lodge a Complaint with the Regulator: If the issue is still not resolved, you may submit a formal complaint to the Securities and Exchange Commission Nigeria for further investigation and assistance. It's advices you physically visit their office. Check SEC Nigeria contact office: https://sec.gov.ng/about/contact-us/
4. What Is a Ponzi or Pyramid Scheme?
A Ponzi or pyramid scheme is a fraudulent investment scam that promises unusually high returns with little or no risk.
Instead of generating profits from legitimate investments, the scheme pays returns to earlier investors using money collected from new investors. This creates the illusion of a successful investment.
However, the scheme eventually collapses when it can no longer attract enough new investors to continue paying returns. When this happens, most investors lose their money.
Note: These fraudulent companies are becoming innovative with their scheme. BE ALERT!!!
5. How Can I Identify a Ponzi Scheme?
Investors should watch for the following warning signs:
-The company is not registered with the regulator: The company or promoters do not appear on the list of licensed capital market operators published by the Securities and Exchange Commission Nigeria.
-No legitimate investment activity: The scheme does not invest in real assets or legitimate financial instruments capable of generating the promised returns.
-Dependence on new investors: Returns paid to earlier investors come directly from money contributed by new investors.
- Unrealistically high returns: The scheme promises returns that are far higher than normal market rates, often exceeding benchmark interest rates set by the CBN.
MMM, CHINMARK, CBEX promised their investors outrageous high ROI( Return on Investment) of 30% - 100%. Always check the market rates on ROI to avoid falling a victim!!
-The use Known promoters (Influencers): The individuals promoting the investment ponzi schemes are known to the investing public and often provide little verifiable information about their operations and mouth watering promises. In Nigeria, some of these investment scammers use influencers to promote their products and high rates of ROI to unsuspecting investors.
As a new investor, always do your research before you invest.
