Islamabad, Feb 8: The Securities and Exchange Commission of Pakistan (SECP) has once again warned the public against fraudulent investment schemes operating under the guise of real estate projects. The commission emphasized that company registration with SECP does not grant firms the authority to collect public deposits, offer guaranteed returns, or run unauthorized investment ventures.
In recent months, SECP has received multiple complaints, particularly from senior citizens, who have lost their life savings to such deceptive schemes. Fraudsters often lure investors with promises of exceptionally high returns while using official-looking documentation, such as Federal Board of Revenue (FBR) national tax numbers and SECP incorporation certificates, to appear legitimate.
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According to the commission, these schemes function as classic Ponzi schemes. They initially distribute returns to early investors using funds collected from new participants, creating an illusion of profitability. However, once the flow of new investments slows down, the system collapses, leaving later investors with substantial financial losses and no legal recourse. In many cases, funds collected from investors are funneled into bank accounts of unregistered entities controlled by the perpetrators, while officially registered companies serve as mere fronts to attract unsuspecting individuals.
SECP clarified that it does not regulate real estate investment schemes, except for Real Estate Investment Trusts (REITs), which are subject to strict regulatory oversight. It urged the public to exercise caution and avoid investing in schemes that offer unrealistic monthly profits. The commission also encouraged citizens to report any suspicious real estate investment activity to law enforcement agencies to prevent further financial harm.
As fraudulent schemes continue to target vulnerable individuals, SECP’s latest advisory serves as a critical reminder for investors to verify the legitimacy of financial ventures before committing their hard-earned money.
