SEC: Desist from Unregistered Investments Crowdfunding Platforms

finance & economy - August 5, 2022

The Securities and Exchange Commission (SEC) has again warned investors about the activities of unregistered investments crowdfunding platforms.

Crowdfunding is the process of raising funds to finance a project or business from the public through an online platform.

Crowdfunding portal is a website, portal, intermediary portal, application, or other similar modules that facilitates interaction between fundraisers and the investing public

SEC in its latest circular stated that it has observed with concern the fraudulent activities of some unregistered investment crowdfunding platforms and hereby strongly advise the investing public against making investment(s) with or through any crowdfunding platform not registered with the Commission.

The apex capital market regulating body stated that 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.

According to the Circular, “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 through its website: sec.gov.ng, e-mail: sec@sec.gov.ng, Phone no: 09-4621168″.

The commission had in the recently released rules on Crowdfunding, said, “A proposed rule has been developed to provide a regulatory framework permitting private companies with the required structure and mechanism in place to raise capital from the public through crowdfunding.”

It noted that Micro, Small and Medium Enterprises (MSMEs) incorporated as a company in Nigeria with a minimum of two-years operating track record should be eligible to raise funds through a crowdfunding portal registered by the commission.

According to the commission, total fees payable to parties to a crowdfunding issue shall not exceed two per cent of the total funds raised.

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