The Capital Markets Authority (CMA) has warned Ugandans to be wary of a surge in economic crimes, especially illegal fund managers, and pyramid and ponzi schemes that are doomed to collapse, offer nothing in return to several participants and are designed to enrich the scammers.
The Authority cited Alliance Motion Global, which was mentioned in Parliament recently among the several firms that are being investigated by the CMA in close cooperation with the Uganda Police Criminal Investigations Department (CID).
According to CMA’s Director for Legal and Board Affairs Miriam Musaali, Alliance is “illegally offering shares and providing investment advice to members of the public”.
“The general public is hereby informed that Alliance Motion Global is not licensed by the CMA and as such, members of the public are strongly cautioned against conducting any business with the said company. Any person who undertakes any dealings with them does so at his/her own risk,” she said.
The Uganda Police registered 8,096 economic cases in 2020 and 10,598 cases in 2019 due to scammers who were mainly motivated by the desire to make quick money thereby making unsuspecting members of the public into their victims through Ponzi and Pyramid schemes among other tricks.
Last year 2,925 victims lost more than Shs41 billion through pyramid schemes and cybercrimes in 2019 and many more have lost money this year through gifting circles and the illegal financial advisory called BA Verve Cards.
“We would like to re-assure all Ugandans that the CMA is continuing to monitor all activities in Uganda's capital markets to ensure order, fairness and transparency. Our primary objective remains protection of investors at all times,” reads a May 10 statement from CMA.
“Given the likely economic impact of Covid-19 on business enterprises and the economy, a number of people are bound to be desperate for survival owing to the spillover effects of the epidemic which include loss of jobs and reduction/ loss of incomes.”
The Authority says it is aware that during such challenging times, unscrupulous individuals tend to take advantage of the unsuspecting public and devise schemes to defraud them of the limited savings they have left to cater for their basic needs.
Such devious characters are likely to emerge with "too-good-to-be-true" financial schemes which promise quick recovery and abnormally high returns on investment, the Authority said, adding: “usually, they will ensure that their first clients are rewarded handsomely so that they serve as testimony to lure more people to invest.”
Said Musaali: “We strongly caution the public to be mindful of such schemes, especially during and post COVID-19 and, avoid falling prey to such selfish characters whose interest is to take advantage of already distressed people.
“While investing in any product, avoid making direct payments to the scheme representatives. All deposits should be made through traceable financial channels such as commercial banks, and mobile money. If you are not sure about a scheme's legitimacy, contact the CMA or check the CMA website to confirm its existence before you place any investments with them.”