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12 Wonder Banks Shutdown by SEC

By on October 3, 2012


The Securities and Exchange Commission (SEC) has shut down the operations of 12 illegal financial institutions also identified as ‘wonder banks’.

A highly placed source who spoke with The Guardian yesterday, also disclosed that the case files have been forwarded to the legal department for necessary advice and immediate prosecution.

The source explained that as soon as the legal department was through with its ‘paper work’ owners of the illegal entities would be charged to court.

According to the source, preliminary investigation also revealed that some commercial banks allegedly collaborate with the wonder banks, “thereby giving credibility to their illegal operations”.

The source said the commission was in possession of vital documents allegedly issued by commercial banks to managers of the illegal financial institutions.

Another senior staffer of the commission, who spoke with The Guardian on the condition of anonymity, yesterday, said: “Some commercial banks collaborate with the wonder banks. They (wonder banks) carry out regular transactions with banks. How did they open the accounts? Some victims even told us (SEC) that they made payments through the commercial banks”.

The commission recently threatened to drag some commercial banks before the Central Bank of Nigeria (CBN) over their alleged involvement in the activities of illegal fund managers.

The Director-General of SEC, Ms Arunma Oteh, recently identified “extra-ordinary profit” as a major bait used by promoters of fraudulent funds managers to attract members of the public.

Addressing capital market stakeholders in Anambra State, Oteh advised investors to report suspected investment scams to the commission.

Also identified as “ponzi schemes”, wonder banks refers to all kinds of illegal funds managers offering “incredible high interest rate which is always beyond what is obtainable and practicable in the financial sector and for very short periods of time. This serves as a bait to unsuspecting investors.”

Information made available by SEC recently said: “As part of ploy to convince their customers and achieve their goal, the wonder banks ensure that they pay the stipulated amount to their relatively few initial customers.

“These payments to first comers serve as a testimonial to convince and secure the trust of victims. They make sure that potential investors hear about what investors have benefited so that they can invest their money too.

“To achieve this, they could assist them in introducing more people to the investment. They could even go as far having branches of their organisation in other states or areas of the same state.

“At times, these wonder banks claim to be involved in the oil and gas sector, foreign exchange trading or some other bogus activities to convince their customers on how they make so much profit.”


Source: Guardian