SEC Criminalises Investing With Unregistered Crowdfunding Platforms

Nigeria’s highest investment regulator, The Security and Exchange Commission (SEC) has read the riot act to the investing public to desist from investing with Unregistered Crowdfunding Platforms to avoid the big stick.

According to the Commission, the warning followed its observation of fraudulent activities of some unregistered investment crowdfunding platforms that have raised concerns.

As such, the SEC strongly advised the investing public against making investment(s) with or through any crowdfunding platform not registered with the Commission.

It’s statement partly read: “The Commission, in recognition of the potentials and importance of crowdfunding platforms and the need to protect investors through effective regulation, had in January 2021 published its crowdfunding rules and requested well-intending crowdfunding platforms to register with the Commission and comply with the Rules by June 30, 2021.

“The Commission by this circular hereby notifies the general public and operators of unregistered crowdfunding platforms, that operating any crowdfunding platform that is not registered by the Commission is illegal and may lead to prosecution of such operators and loss of investment by their clients.

“Members of the public are further advised to confirm the registration status of any entity soliciting their participation in any investment scheme by contacting the Commission.”

What you should know

Crowdfunding is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.

Because of the large number of people involved and the rather porous internet channel of raising the fund, individuals with ulterior motive can easily swindle unsuspecting public through crowdfunding, hence SEC’s stern position to regulate activities in the space.