A response to SEC by MMM Member who is lawyer.
A CHALLENGE TO EXAMINE THE EVIDENCE AGAINST MMM – AN OPEN RESPONSE TO THE WARNING OF THE SECURITIES & EXCHANGE COMMISSION OF NIGERIA
In the news recently Securities & Exchange Commission in pursuance of their statutory duties issued a well-intentioned but I dare say misinformed warning to the general public about MMM being a Ponzi scheme and most recently making the news rounds is the purported report of the warning of Central Bank of Nigeria against the activities of MMM which was penned by one Obinna Chima of ThisDay newspaper on the 14th September 2016 edition. First as an aside, the CBN never issued a categorical statement against MMM. In fact, the quoted statement of its acting Director of Corporate Communications, Mr. Isaac Okoroafor never referred to MMM. The only mention of MMM was the subjective and unsubstantiated opinion of ThisDay newspaper’s reporter. CBN’s warning was against “wonder banks” and “deposit money institution” in other words CBN was warning against patronizing institutions that physically seek deposit of funds in a central account (or any account subject to their control) on the promise of high yield interest rates nothing more ( Here is the link to the original report at http://www.thisdaylive.com/index.php/2016/09/14/cbn-warns-nigerians-against-investing-in-wonder-banks/ for you to read it for clarity). Consequently, I will not burn intellectual fuel in analysing the ostensible false warning attributed to CBN. Now to the SEC warning. As a legal practitioner of many years standing and as a prudent ordinary citizen like any other reasonably informed person my curiosity was pricked by SEC’s warning against MMM and that has led me to seek to understand the facts that will aid a reasonable conclusion. In my view the pertinent questions begging for answers are Who or what is MMM? Why are its activities illegal? And the what are the evidence proffered by SEC to support their allegation and disclaimer? Permit me I shall proceed in the manner of my training to examine the relevant facts. To arrive at a just determination of the issues raised it is pertinent to examine the statement of SEC and their supporting evidence or proof of culpability and then deconstruct the activities of MMM to see if it is guilty as charged. I will quote SEC’s statement: “The attention of SEC, Nigeria has been drawn to the activities of an online investment scheme tagged ‘MMM Federal Republic of Nigeria (nigeria.mmm.net). The platform has embarked on an aggressive online media campaign to lure the investing public to participate in what it called ‘mutual aid financial network’ with a mont hly investment return of 30 per “The commission hereby notifies the investing cent. public that the operation of this investment scheme has no tangible business model hence it’s a Ponzi Scheme , where returns are paid from other people’s invested sum . Also, its operation is not registered by the Commission . “ The general public is hereby advised to distance themselves from this online scheme. Please note that anyone that subscribe to this his/her own risk What inve . ” (underlining mine for emphasis) is noteworthy is that illegal activity does so at MMM the subject is described as an online stment scheme, a mutual aid financial network which promises a monthly investment return of 30 percent. Note the reason SEC declares it illegal is that the unlicensed online it is a Ponzi scheme investment scheme has not tangible business model where returns are paid from other people’s investment hence . First it important to state that a monthly return of 30 percent on an investment is not illegal. So what makes the activities of MMM illegal under SEC’s regulatory purview? Simple. It is operating an unlice nsed investment scheme with no tangible business model. So the question is subject to registration with SEC? , is MMM an investment scheme only an examination of the activities of MMM can reveal the answer so let’s examine MMM. MMM describes itself as a volu ntary union or association of persons voluntarily providing financial aid or donat ing their spare money obligation on the receiver’s part to pay back. to one another with no Participation in the community does not give rise to a lender and borrower obligat ion. As an incentive to encourage the “voluntary giving or donation” the community rewards the giver with a 1 percent daily interest which accumulates or grows for 30 days hence the promise of 30% return. MMM operates no central structure or bank account t o collect money. In fact , money is never paid to MMM , participating member s directly pay the money to one another. MMM merely provides the platform and rules for such engagement and gets nothing in return because it is an ideologically based “people movemen t” organization which leverages on the power of freewill community giving as a gateway to financial freedom from established financial institutions Of significant note is that MMM which propensity is to favour only the rich clearly and explicitly warn participants o the . n site to only participate with their spare money its (money they can afford to lose) as they stand the risk of losing all . and that there are no guarantees whatsoever as no member is under the obligation to repay any donation and MMM fully discloses that the expected 30 percent reward for donations is gotten from old satisfied members who continue to give or donate and also from the donations of new members joining the community nothing else. It states clearly that there no investment or any relationship with the capital market, no goods or product sell s to , no obligation to refer or bring anyone to join and no requirement to make any number of donation. Nothing, just people giving each other money with no guarantees. SEC’s charge that MMM pa ys returns “ from other people’s invested sum ” with respect is ignorant and stems from a lack of understanding the workings of MMM. No participant is under any illusion as to how the 30 percent is obtained. It is from participants. Take it or leave it. I wi ll now address the pertinent issues sequential statement . First, ly as they arose in SEC’s it is important to note that the word “investment” has a technical meaning apart from the everyday ordinary meaning. Securities Act 2007 t Though under Investments & he term “investment” was never defined the Second Schedule, Section 304 of the Investments & Securities Act 2007 however it stipulated broad categories and registrable activities like shares, stock, bonds, government and public securities etc. Nigeria. On the allegation of o that constitu perating an “ te investment business in online investment scheme ” I do not see how any of the activities of MMM which is essentially freewill giving described above fit under any of the categories or activities under the Secon d Schedule of Investments & Securities Act 2007 broadly interpreted this section cannot co. I must say no matter how opt or designate donation or giving” as an inv “freewill or voluntary estment. It will be most absurd and illogical. For academic postulatio n sake, assuming without conceding the least that MMM activities can be described as an investment under Investments & Securities Act 2007 it is even doubtful if SEC’s has the powers to regulate an scheme ” whose computer server or origin “ online investment is based outside Nigeria. It will be a legal nightmare and a complex watery grave of conflict of laws to navigate best legal team Secondly, . even for the on the charge that its operation is not registered by SEC, I must say that SEC lacks the power to re gistered or regulated online investment schemes. However, a MMM as a voluntary association of whatever complex mutual aid society or a social network of financial aid ( ion whether as call it whatever you like is guaranteed the freedom of association under the 1999 ) Constitution of the Federal Republic of Nigeria Sec is non(as amended) thus the requirement to register with sequitur, it’s a none starter. It is irrelevant where nonregulated activity MMM like voluntary donation among members MMM also have the freedom and indeed the right to own and . engage Memb s in a ers of dispose of their property which include their money in whatever manner they deem fit. This is a right to private property guaranteed by the 1999 Constitution (as amended) . And to the best of my knowledge it is not illegal under Nigerian Law to give or make a donation of your money to a charitable cause or to any cause not explicitly declared illegal and you don’t need a license for that the freewill giving in M MM illegal . Thirdly, on the charge of MMM being a Ponzi , thus it will be futile to label scheme, let juxtapose the features of a Ponzi scheme and the activities of MMM. A Ponzi scheme in essence is a clever investment scheme which lure people to invest in a supposedly legitimate business with a promises a high yield scheme the scam artiste interest rate for the relies on the inflow of cash investment . In a Ponzi to its central account new members to satisfy old member s and to maintain a from façade of prosperity order to continue entic e new members. in This in the long run is unsustainable and he disappear with the cash leaving people broken. Note that in a Ponzi scheme members trust and give their money to “investment guru” to make them more money from opaque transactions . In all instance central account where money is paid to s of Ponzi schemes there is a (show me one that does not have a central account?) . This makes it easy for the scam artiste to bail with the money of members. In MMM members are told clearly that there is no investment or any relationship with the capital market, no goods or products to sell, no business to invest in, no obligation to refer or bring anyone to join MMM. Nothing, just people giving each other money with no guarantees. There is no central account to pay mo ney to. Members directly share their money with each other. Members understand that money is gotten from but old and new members donating. Nothing more. Nothing less. What can be more transparent? of MMM knowingly participation. and willingly accept he associated risks Member of their Now I ask how is this a Ponzi scheme? It is not. Yes, MMM d logic but that does not make it a Ponzi scheme. If it is , SEC failed to efies provide the damming proof. A mere wishy serious minded wash y warning statement regulatory agency like SEC . Another important consideration is who is complaining does not cut it for a ? It is hard not to notice the comments online which typifies the wave of support MMM enjoys from millions of Nigerians who are benefitting from it. SEC’s perception of the organization is fundamentally flawed as it erroneously describes MMM as an inves tment which it is not. The activities of MMM described above does not fit under any of the categories or activities under the Second Schedule of Investments & Securities Act 2007. I vaguely suspect SEC never carried out a ny proper investigation of the acti vities of MMM before rushing out a warning statement. It must have been man i pulated by some overbearing interests whose jobs are being threatened by the ideology of MMM which is catching on like wildfire. I know that in this discourse only time and superior proof can be the final arbiter but before then SEC don’t sell me your baseless accusations on the platter of your reputation. I am a man of full intellect. Take it from me MMM is not a scam. It is a revolution. I stand to be counted me as a member.
Signed
17/09/2016
Ataguba S. Aboje, Esq
Abuja
08098667600
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