The Capital Markets Authority (CMA) of Kenya has issued a public advisory warning investors about five common tactics used by fraudulent investment firms. These firms often lure Kenyans with promises of high returns and little or no risk. The regulator has noted that guarantees of unusually high returns, such as "30 per cent every month with no risk," are clear signs of a scam.
The CMA has identified a second red flag: the use of urgent language by scammers. They often employ messages like "Offer ends today! Send money now" to pressure immediate investment. The authority has urged investors to be cautious and verify the licensing status of any firm before investing. This can be done by checking the firm's details on the CMA's official licence portal.
The CMA's portal lists all approved market participants, including fund managers, stockbrokers, investment banks, securities dealers, online foreign-exchange brokers, and venture-capital firms. Investors are advised to verify that any broker, fund manager, investment adviser, or online forex dealer appears on this portal before transferring funds. This step can help prevent investors from falling prey to unlicensed and fraudulent firms.
A fourth warning concerns payment methods; scammers frequently request transfers via cryptocurrency or other untraceable channels, which should be treated as suspicious. The CMA has also flagged the use of celebrity videos, online friends, or claims of secret profit-making systems as a tactic to add credibility to fraudulent schemes.
The advisory follows a September 12 notice in which the CMA flagged 15 investment platforms for operating without the required licences. Many of these platforms marketed forex, cryptocurrency, and Money Market Fund products. The CMA made the list of the 15 flagged platforms publicly available on its website, urging Kenyans to review the names and avoid dealing with unlicensed entities.
The CMA has warned investors to pause and verify any opportunity that promises unusually high returns, demands immediate payment, or operates outside the CMA's licensing framework. By taking these precautions, investors can protect themselves from falling victim to scams. The authority is committed to ensuring that Kenya's capital markets are safe and transparent for all investors.
The CMA's warning is a timely reminder for investors to be vigilant and do their due diligence before investing in any opportunity. By verifying the licensing status of firms and being aware of common tactics used by scammers, investors can make informed decisions and avoid potential losses. The CMA continues to monitor the market and take action against unlicensed and fraudulent firms.
Key points
- The CMA has identified five common tactics used by fraudulent investment firms, including promises of high returns with little or no risk.
- The authority has urged investors to verify the licensing status of firms before investing and to be cautious of urgent language and suspicious payment methods.
- The CMA has flagged 15 investment platforms for operating without the required licences and made the list publicly available on its website.
