Potential investors warned in wake of Dundee-based 'pyramid scheme'
An economist is
urging potential investors to verify the authenticity and credibility of
trading entities before handing over their hard-earned money.
He's been commenting after the arrests of three people in northern KZN, accused of scamming investors out of R73 million through a pyramid scheme.
Coin-It's Malcolm, Patricia and Samantha de Beer lined up in the Pietermaritzburg Magistrates' Court on Tuesday facing fraud charges and contravening the Financial Advisory and Intermediary Services Act and the Banks Act.
Hawks officials say the Dundee-based company had promised clients significant investment returns.
Efficient Group economist Dawie Roodt has advised potential investors to always look into a company before doing business.
READ: KZN Hawks nab three accused of running pyramid scheme
"If you don't know the people you are doing business with, then find out, ask them for their existing clients and find out. These kinds of schemes promise good returns and whenever you get a return that is well above normal then you must be worried.
"You must find where the money is going. Something else to look out for is the administration around the whole thing, do you have to fill in forms like Rica (The Regulation of Interception of Communications and Provision of Communication- Related Information Act)?"
He says if you're not sure about how the business works, acquire the assistance of a financial advisor.
" A financial advisor will determine what your risk appetite is and then will advise on certain products. Many financial advisors are associated with bigger financial institutions and companies, and they do a lot of work to ensure that the products that their financial advisors sell are legit and safe for the customers to invest in."
