SEC cautions investors against fraudulent investment schemes

The Director-General of the Securities and Exchange Commission (SEC), Ghana, Dr James Klutse Avedzi, has cautioned investors against falling victim to fraudulent investment schemes, warning that scammers often exploit urgency and pressure to lure unsuspecting people.

He urged the public to verify investment firms’ licensing status before committing money and to be wary of offers promising unusually high returns.

“Resist pressure. If you are told to act now or bring a friend, slow down. Urgency is a scammer’s favourite tool,” Dr Avedzi said.

He was speaking at the SEC’s “Time with the SEC” programme in Sunyani in the Bono Region, held on the theme, “Building Financial Confidence for a Brighter Tomorrow.”

Dr Avedzi said fraudulent investment offers were increasingly reaching the public through social media platforms, including WhatsApp, Telegram and TikTok, with some using fake endorsements and AI-generated videos to appear credible.

He noted that some schemes promised returns of 30 per cent or more monthly, urging investors to exercise caution rather than be swayed by the prospect of quick profits.

“Before you invest in a single cedi, confirm that the firm is licensed by SEC,” he advised, identifying verification, scepticism towards guaranteed returns and resistance to pressure as three essential habits for making sound investment decisions.

“If it does not carry a license from the SEC, walk away,” he added.

The SEC Director-General stressed that financial literacy was essential for everyone, regardless of income level or occupation, as everyday decisions about spending, saving and investing could shape individuals’ financial futures.

“Financial literacy is not a luxury. It is a life skill. And anyone can learn it starting from today,” he said.

Dr Avedzi explained that building wealth required disciplined saving, purposeful financial planning and informed investment decisions rather than reliance on schemes promising quick returns.

He encouraged Ghanaians to save consistently, however small the amount, and explore suitable investment opportunities based on their financial goals, risk tolerance and investment timelines.

He also urged prospective investors to understand the products they were buying, explaining that bonds, shares and collective investment schemes carried different levels of risk, returns and liquidity.

“There is no single best product, only the one that fits your goals and how long you can wait,” he said.

The SEC initiative, he explained, was designed to bring practical financial education closer to communities, demystify the capital market and empower students, investors and members of the public to make informed decisions.

Dr Avedzi further disclosed that ongoing efforts to overhaul the Securities Industry Act, 2016 (Act 929), would introduce an investor protection fund to provide a framework for partial compensation for investors who suffer losses through infractions by licensed operators.

He, however, cautioned that the proposed protection mechanism should not be interpreted as a reason to take risks with unlicensed schemes.

“We believe firmly that an informed investor is a well-protected investor,” he said.

Dr Avedzi said a financially confident society could be built through disciplined saving, informed investing and the willingness to question suspicious offers.

“A brighter tomorrow is not delivered by any scheme. It is earned through disciplined saving, informed investing and the habit of verifying before we trust,” he said.

He encouraged participants to share the knowledge gained at the programme with their families, colleagues and communities to strengthen financial awareness across the country.