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CEMAC: Financial watchdog COSUMAF once again warns against illegal investment offers

CEMAC: Financial watchdog COSUMAF once again warns against illegal investment offers
  • Comments   -   Monday, 07 June 2021 13:12

(Business in Cameroon) - Faced with the upsurge of investment firms promising outstanding returns in the order of 100 to 500%, the Central African Financial Market Supervisory Commission (COSUMAF) recently issued a warning to the public against such firms.

In the note he issued in late May 2021, Nagoum Yamassoum (photo), President of the COSUMAF, warned the CEMAC public against those firms that have no operating license or authorizations.

The note names some of those firms including Global Investment Trading (Liyeplimal), Highlife International Cameroon, Cameroon Invest, Timex Trading Cameroon, TJTM Cameroun, and Tagus Investment, which are all based in Cameroon.

According to the COSUMAF, those firms “unlawfully collect funds from the public as equity participation, financial, real estate or rolling stock investments with the promise of returns amounting to 100 to 500% of the principals within unreasonable timescales.

The financial watchdog explains that those firms are acting fraudulently in violation of the laws in force. Indeed, as the financial watchdog explains, for any activity related to initial public offering or financial instrument marketing, the firm performing those activities must be approved by the COSUMAF and have a license duly issued by the watchdog.

Persisting offenders

The COSUMAF indicates that before investing in any financial instrument, the CEMAC public must make sure the firm offering that instrument is authorized to do so and have the proper license issued by a financial regulator. The public is also advised to seek additional information on the company offering the instrument. Because no sales pitch should make the public forget that the returns are usually proportional to the risk. Meaning, the higher the promised return, the higher the risks of losing the whole investment.

This is not the first time the COSUMAF is warning against those firms. On October 21, 2020, the watchdog issued a statement warning the Cameroonian public against such firms. At the time, a list of 20 firms offering such services. Those firms are still the same the COSUMAF is warning against in the May 2021 list.

This new warning is issued because despite the first statement, the firms are still operating without licenses and they are even thriving and attracting more people who are lured by the rapid and high returns. For the regulator, this could be detrimental for the public since most of those firms use the Ponzi scheme as their operating system.

This scheme is a fraudulent practice that consists of remunerating clients’ “investments” with new entrants’ “investments”. The scheme is uncovered only when the money contributed by new entrants is no more sufficient to pay the interest due to old investors.

Sylvain Andzongo

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