SECP Warns People Against Investing in Fraudulent Companies

The Securities and Exchange Commission of Pakistan (SECP) has cautioned the general public that the Certificate of Incorporation of a company is only evidence of its registration as a corporate entity.

In a statement, SECP said that it issues warnings to raise awareness among the public regarding potentially fraudulent activities perpetrated by companies and individuals posing as legitimate incorporated persons that come to its attention.

SECP said that based on information available on social media and complaints received recently it has been observed that the following typical business models are being used to lure the public:

  • Mobile/web-based apps promising lucrative profits/referral bonuses on deposits/investments
  • Seeking deposits in the name of making investments on your behalf in different products and promise of lucrative returns like investments in Surface Mount LED (SMD) screens, trading of different products/forex/cryptos
  • Taking advances in the name of fees/down payment for the provision of loans or assets on lease/easy installments at low markup;
  • Receiving funds for online jobs packages

SECP highlighted that deposit-taking/leasing/financing is only permissible to companies that have obtained a license (different from an incorporation certificate) to that effect.

Any person dealing with a company is recommended to self-check the status of that company on SECP’s website or by raising a query with SECP. A list of companies suspected to be involved in unauthorized businesses is placed on the SECP website and is updated from time to time, the statement added.

SECP has advised the public to remain vigilant and report any suspected activity by a registered company to SECP.

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