FSC Issues Warning against investing in “Get Rich Quick” Schemes

Communication and International Relations Manager at the Financial Services Commission, David Geddes is warning investors in Unregistered Financial Organisations (UFO’s) that not only are they at risk of losing their money but they are financing criminal enterprises. He was speaking at the Jamaica Association of Insurance and Financial Advisors (JAIFA) installation ceremony for Mrs. Kathryn Marrett as 66th President at the Knutsford Court Hotel in Kingston.

Mr. Geddes warned the JAIFA members that our communication and strategic thinking skills are being tempered by impatience and an uneducated ear for listening, waiting to speak as opposed to listening, digesting, analysing and responding. He said the notion of working and investing is falling prey to impatience and the need to achieve goals, objectives and financial success immediately.

Mr. Geddes said this type of environment lends itself to an upsurge in the number of unregulated investment type schemes making the rounds particularly through social media. He said the FSC will be relentless in its efforts to stamp out Pyramid, Ponzi and other illegal schemes which prey on our citizens.

A pyramid scheme is structured so that the initial organizer must recruit other investors who will continue to recruit other investors and those investors will then continue to recruit additional investors and so on.

Sometimes there will be an incentive that is presented as an investment opportunity, such as the right to sell a particular product. Each investor pays the person who recruited them for the chance to sell this item. The recipient must share the proceeds with those at the higher levels of the pyramid structure.

Mr. Geddes said the key to protection against investment fraud, including on the internet, is to be an educated investor and to utilize your knowledge. Check before you invest.

He said investors should be wary of high yield investment schemes which are not registered with the FSC and which are offered by unlicensed individuals.

Look out for red flags such as secretive or complex strategies and fee structures, emphasis on recruiting and difficulty in receiving payments.

One of the hallmarks of these schemes is the promise of high returns with little or no risk.

Mr. Geddes said remember the old adage “if it looks too good to be true, it probably is.”