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SECURITIES AND EXCHANGE COMMISSION, GHANA

FAIRNESS | INTEGRITY | PROTECTION. SECURITIES AND EXCHANGE COMMISSION, GHANA. “ Ensuring Investor Protection”. ADDRESSING THE THREATS OF PONZI SCHEMES IN GHANA: A SHARED RESPONSIBILITY. PRESENTED BY EMMANUEL ASHONG-KATAI

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SECURITIES AND EXCHANGE COMMISSION, GHANA

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  1. FAIRNESS | INTEGRITY | PROTECTION SECURITIES AND EXCHANGE COMMISSION, GHANA “Ensuring Investor Protection”

  2. ADDRESSING THE THREATS OF PONZI SCHEMES IN GHANA: A SHARED RESPONSIBILITY PRESENTED BY EMMANUEL ASHONG-KATAI HEAD, POLICY, RESEARCH & IT DEPARTMENTSECURITIES AND EXCHANGE COMMISSION 2018 “Ensuring Investor Protection”

  3. Presentation Outline

  4. What is Ponzi Scheme “Ensuring Investor Protection”

  5. What are Pyramid Schemes “Ensuring Investor Protection”

  6. Types of Pyramid and Ponzi Schemes “Ensuring Investor Protection”

  7. Down Memory Lane “Ensuring Investor Protection”

  8. Down Memory Lane (cont’d) -2018: Joseph Melli and Mathew Harriton defrauded 138 investors of $97million -2018: Bit connect, crypto currency 1% daily return on investment. Local -1995: Pyramid Scheme, R5 -2016: DKM -2018: Menzgold -2019: Finefort, TCL Markets, GCCH “Ensuring Investor Protection”

  9. IDENTIFICATION OF PONZI/PYRAMID SCHEMES(1) 1) Unreasonable and unrealistic high returns- if it is too good to be true, then be highly suspicious -Is it above the norm in traditional banking setting? 2) Overly constant returns 3) Is the product registered or approved by the regulatory agencies e.g. BoG, SEC, NIC, NPRA? 4) Is the firm licensed by any of the financial regulatory agencies? – BoG, SEC, NIC, NPRA 5) Are the regulators aware of the firm or investment product? -Most of them operate in remote areas of the country -Also in rich mining, agricultural and commercial centres of the country “Ensuring Investor Protection”

  10. IDENTIFICATION OF PONZI/PYRAMID SCHEMES (2) 6) Is it easy to understand the product? -They often use complex strategies to confuse victims -Complex and fairly new investment products e.g. Cryptocurrencies, Forex Trading, Initial Coin Offering (ICO), Multi-layered strategy 7) Inadequate information and documentation on the product. -Paper work is not properly made. -Conflicting investment statement of account. -Poor administration, structures not properly set up. -Difficulty in getting proper statement of account on periodic basis. 8) Band-Wagon Signs -Crowd moving in the same direction (Don’t follow the crowd) -Herd mentality and behaviour “Ensuring Investor Protection”

  11. IDENTIFICATION OF PONZI/PYRAMID SCHEMES (3) 9) Is the company making huge donations, splashing monies to charity, engaged in heavy sponsorship deals, advertising and promotions? 10) Lifestyle of the promoter(s). 11) Difficulty in receiving regular payments. 12) Are the promoters willing to subject themselves to regulations (controls)? 13) Can you identify where the monies are being invested to provide the unreasonable yields they pay their customers. “Ensuring Investor Protection”

  12. THREATS OF PONZI/PYRAMID SCHEMES Ensuring Investor Protection”

  13. How Do We Address the Threats of Ponzi/Pyramid Schemes in Ghana (1) 1) An intensive financial literacy campaign ( Radio, TV, Print, outdoor social and social media) -A well informed and financially literate investor is a well protected investor -Overall national literacy rate- 70%, Financial literacy rate is 58%. - Risk versus return on investment. -What are Ponzi/pyramid schemes? How to identify them. -Cryptocurriencies: Are they investments or risky bets? -Understanding Investments. -Identification of genuine investment products. Ensuring Investor Protection”

  14. How Do We Address the Threats of Ponzi/Pyramid Schemes in Ghana (2) Ensuring Investor Protection”

  15. How Do We Address the Threats of Ponzi/Pyramid Schemes in Ghana (3) “Ensuring Investor Protection”

  16. How Do We Address the Threats of Ponzi/Pyramid Schemes in Ghana (4) “Ensuring Investor Protection”

  17. Conclusions “Ensuring Investor Protection”

  18. Thank You END THANK YOU FOR YOUR ATTENTION “Ensuring Investor Protection”

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