Sunday, February 5, 2023

Investment Scam: Bayelsa govt speaks on forex trading

“Some cooperatives modify their by-laws to include forex trading, but by-laws can not be superior to extant laws.”

• May 31, 2021
Forex Chart
Forex Chart used to illustrate the story

The Bayelsa government says its 2014 Cooperative Law which some cooperatives societies cite as a regulation to mobilise funds for investment in forex trading does not cover foreign exchange trading.

The Commissioner for Trade, Industry and Investment, Federal Otokito, said on Monday that the crash of the dominant cooperative society engaged in forex trading, Barazar Multipurpose Cooperative, was of great concern.

Mr Otokito said that the government frowned at a development where the groups got registration and approvals to operate as cooperatives and later modify its by-laws to include forex trading, noting that the by-laws could not be superior to the extant laws.

Mr Otokitio said that the state government remained committed to the development of cooperatives and the safety of investors funds.

He explained that the Bureau of Cooperatives Development, a parastatal under the Ministry of Trade and Investment, was in receipt of several petitions from members of cooperative societies engaged in foreign exchange trading and was monitoring the situation.

“Our Cooperative Law of 2014 does not include foreign exchange as one of the areas that cooperatives can engage in. What they do is to apply and get registration to operate cooperatives. And after getting approvals they review their by-laws to include forex trading,” he said.

It would be recalled that Baraza, the most popular cooperative in Bayelsa, was using the cooperative model to mobilise funds from its members. It, however, failed to meet its 25 per cent monthly return payment obligations, thereby trapping funds running into billions of naira for its over 40,000 investors.

Baraza had, since March, halted the monthly payment of 25 per cent returns to subscribers to the scheme and announced a three-month suspension of payment of returns to allow it to recover from the crash.

The Economic and Financial Crimes Commission (EFCC) had, in April, cautioned members of the public to be wary of investment schemes that offer mouth-watering returns for the safety of their hard-earned money.

Meanwhile, in reaction to reports of petitions by members whose returns were due since March, the chief executive of Baraza Multi-Purpose Society, Miebi Briebina, confirmed that the society had ‘paused’ payment of returns to recover from challenges faced by the cooperative.

On the directives by the Securities and Exchange Commission (SEC) to all entities engaged in mobilising investors funds for investment in financial derivatives using digital platforms, Mr Briebina insisted that cooperatives were not being regulated by SEC.

“SEC does not regulate cooperative societies, so we will seek clarification on this directive.

“The Nigerian Cooperative Act 2004 defines how cooperatives should operate. We do not mobilise public funds but use only members funds,” Mr Briebina said.

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