PONZI schemes are now illegal in TT due to recent changes in the law, said the TT Securities Exchange Commission (TTSEC) in a recent statement.
Named after Italian swindler Charles Ponzi (1882-1949) who operated in the US and Canada, a Ponzi scheme pays investors in a non-existent enterprise merely by funds from new investors rather than profits generated by productive business activity.
The TTSEC announced certain amendments to the Securities Act, (done under the Finance Bill (No 2) 2021.)
"A new Section 165A has been inserted after the existing Section 165 of the act to provide for the criminalising of any ‘prohibited schemes,’ namely Ponzi and pyramid-type schemes.
"Under the amended Act, it is now a criminal offence to establish, operate, advertise or participate in these prohibited schemes."
It is now also an offence to invite persons to join a prohibited scheme.
"The act further provides that a person who establishes or operates a prohibited scheme is liable, if convicted, to pay a fine of $10 million or to imprisonment for ten years.
In addition, the act says a person who knowingly participates in a prohibited scheme is liable, if convicted, to pay $5 million or to imprisonment for five years.
"For knowingly advertising or inviting another person to join a prohibited scheme a person is liable, if convicted, to pay $2 million or to imprisonment for three years."
The TTSEC asked members of the public who may have information about the operation of a prohibited scheme to contact them or send the relevant information (audio or video files, documents, texts or images) via the TTSEC Investor Protection App, easily downloadable via the Google and Apple Stores. It can be found at the Google PlayStore at: https://play.google.com/store/apps/details?id=tt.org.ttsec.apps.investorprotection&gl=us or Apple Store https://apps.apple.com/tt/app/investor-protection/id1577949717.
Last December during debate on the Finance Bill (no 2) 2021 former attorney general Faris Al-Rawi had warned the public against "too-good-to-be-true schemes" which the law would curb.
Piloting that Finance Bill, Finance Minister Colm Imbert had attested to "the deleterious effects of Ponzi, pyramid and other schemes on the economy and on the vulnerable in society."
He explained, "A prohibited scheme means the business is structured in such a way that the returns that an investor or client earns is directly tied to the number of persons he recruits to join the scheme. "You recruit more and more people, and you get more and more money."
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