The Eastern Caribbean Securities Regulatory Commission (ECSRC) has offered suggestions on how one can safeguard his or herself from fraudulent investment offerings being circulated via the internet and other channels.
The ECSRC, in an August 21 press release, noted that these scams are being promoted using the COVID-19 pandemic as a cover to target unsuspecting or vulnerable individuals in times of economic stagnation and downturns.
They include: Pyramid Schemes, Unauthorised Forex Trading, false COVID-19 related investments and Work from Home and Personal Finance scams.
Therefore, the Commission is advising individuals within member countries of the Eastern Caribbean Currency Union (ECCU) to protect oneself by:
1. Being suspicious of persons who contact you to invest quickly or promise high returns on your investment.
2. Seeking financial advice or guidance before you invest.
3. Ensuring that any individual or firm with which you conduct business is licensed or authorised by the ECSRC or other relevant government authority.
The ECSRC explained that a Pyramid Scheme is a fraudulent investment offering that profits almost solely through the recruitment of other participants into the programme. The ECSRC warns the public to be on the alert for the following red flags of a Pyramid Scheme:
1. Emphasis on recruiting new participants to join the scheme;
2. Promise of a high return over a short time;
3. No genuine product or service is offered; and
4. Complex commission structure
Earlier this month, over 1,200 Trinidadians, who were part of such a scheme dubbed, “Blessing Circle” lost their initial $700 payment, when it “crashed.” They were promised to receive over $18,000 in “blessings” and the payout was dependent on recruiting new members to ‘invest.’ To date, the members are hunting the group administrator of the online chat group, whose real name is unknown, in hope to recover their monies.
Unauthorised Foreign Exchange Market (Forex) Trading
Unauthorised Forex Trading Scams offer the chance to trade in foreign exchange, contracts for difference, binary options, crypto-assets and other commodities. These scams offer very high returns and guaranteed profits either through managed accounts where the firm makes trades on the investor’s behalf or by trading using the firm’s trading platform.
In recent months, several Grenadians have been recruited into Tradera, a trading educational and networking platform, which fits the description of such schemes. However, a spokesperson for the company, in a local newscast said Tradera is a real company operating in a heavily regulated environment in North America.
Despite the spokesman’s utterances that “Under no circumstance, do we take anyone’s money. We provide financial services, we teach people the basics to advance strategy in the FOREX (Foreign Exchange) market, a $6 trillion a day marketplace,” many locals are still apprehensive to join.
The ECSRC also warns of other types of financial scams, which all seek to capitalise on the unprecedented anxiety caused by the COVID-19 pandemic, such as:
• Work-From-Home Scams: fraudsters seek to take advantage of individuals seeking alternative sources of financing due to COVID 19 related measures.
• Personal Finance Scams: using the fear of current economic conditions, fraudsters target individuals by posing as a financial institution requesting sensitive personal or financial information.
All of these schemes are usually operated in violation of the law by evading legal requirements such as obtaining the necessary licences or authorisations to raise funds from the public for collective investment purposes.
The ECSRC promises to continue to take the necessary measures to prevent securities fraud in the Eastern Caribbean Securities Market. Therefore, it urges persons who are aware of or have been the victim of a fraudulent scheme in the ECCU, to contact the ECSRC via email at firstname.lastname@example.org or the law enforcement authorities in your country.
The ECSRC is the regulator of securities business in the ECCU, whose member countries are: Anguilla, Antigua and Barbuda, The Commonwealth of Dominica, Grenada, Montserrat, Saint Christopher (St Kitts) and Nevis, Saint Lucia, and Saint Vincent and the Grenadines.
The securities industry in the ECCU is governed by uniform securities legislation, the Securities Act 2001 and its amendments and Regulations to the Act. The primary functions of the Commission are to maintain the integrity of the Eastern Caribbean Securities Market; protect investors; promote market efficiency; and facilitate market development.