Research general capital market information before investing – SEC


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Mr. Francis Boadu, Head of Department (HoD) in charge of brokers and advisers at the Securities and Exchange Commission (SEC) called on investors to seek general information on the capital market and market products, to seek information capital market operators, report persons suspected of operating in the unlicensed capital market, report fraudulent investment programs and the activities of capital market operators, and address complaints to them so that they can be processed.

He advised investors to never invest any money in an investment that they do not fully understand and if they suspect an investment to be a Ponzi scheme or any other type of scam, they should file a complaint with of the Commission.

Mr Boadu, who gave advice in an interview with Newsghana in Takoradi during the Western Regional edition of “Time With the SEC”, revealed that there are many online resources to help investors learn how to invest and assess risk and potential reward opportunities. so as not to invest in the wrong capital market.

He revealed that most of the Ponzi schemes are based on a theoretical business model to produce the touted profitability and superior returns for his investors and therefore would like to use creative accounting devices to prepare their books and will mostly use the funds of the new ones. investors to pay previous investors. .

He said lobbyists still employ artificial devices to cover up lack of economic substance or delay recognition of an economic loss and mostly represent that investor returns have been generated from a purported business venture.

Mr Boadu mentioned that when a Ponzi scheme is about to collapse or be exposed, the promoter can take the money and disappear, sell the business, reimburse any investor who complains and transfer the funds. investors in a new or existing fictitious entity that is self-liquidating.

They can also create a new leadership which can include the sponsor and / or a core group of investors and try to control, manipulate and deflect any regulatory investigation of the program and seek investor loyalty in doing so.

He believed that lobbyists resort to “source credibility” tactics when establishing their credibility through associations or involvement with reputable people or entities, or with referrals or experiences. particular, in particular in the legal, financial and investment sector.

Tactics of “social consensus” with the idea that others have already invested, creating an appearance of success that appeals to the “herd instinct”; “reciprocity” tactics by offering to do a small favor in exchange for a large favor, such as giving a discount in exchange for an immediate partial investment; and “scarcity” tactics thus creating a false sense of urgency.

According to him, “if someone tries to sell an investment that has huge and / or immediate returns for little or no risk, it could very well involve some sort of fraud, and if someone unexpectedly contacts you, perhaps inviting yourself to an investment seminar, is often a red flag.

He said that one should be wary of any investment that continues to generate steady positive returns despite general market conditions and economic conditions.

He added that one should be wary of statements which excessively represent that the safety, security and liquidity of the principal was safe and positive in particular, when hearing statements such as “no investor has ever lost a single penny of his investment with us “and” we have an unblemished track record of meeting or exceeding the promised profitability.

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