SECP Warns Against Fraudulent Real Estate Investment Schemes

The Securities and Exchange Commission of Pakistan (SECP) has once again emphasized that simply registering a company with the regulator does not grant firms the authority to collect public deposits, promise guaranteed returns, or engage in deceptive investment schemes disguised as real estate ventures. The SECP has received numerous complaints, especially from elderly individuals, who lost their life savings to these fraudulent schemes.

In its statement, the SECP clarified that these bogus real estate investment schemes lure people by promising attractive returns. Scammers deceive potential investors by using fake Federal Board of Revenue (FBR) tax numbers and SECP incorporation certificates to create a façade of legitimacy.

These schemes gather deposits from many people, claiming the money will be used for real estate investments while offering unrealistic monthly returns. The funds are often funneled into bank accounts of unregistered entities controlled by the fraudsters, while the registered companies act as a front to draw in investors.

The SECP has labeled these operations as Ponzi schemes, where early investors are paid using the funds of newer investors, ultimately leading to collapse and leaving later investors with no recourse. The SECP clarified that it only regulates Real Estate Investment Trusts (REITs) in the real estate sector.

The SECP urged the public to stay vigilant and avoid investing in schemes that promise high returns. It also recommended reporting any suspicious activities related to such real estate schemes to law enforcement.

SOURCE: The Profit Magazine Pakistan