The SC regularly receives complaints from the public on unlicensed entities operating illegally or fraudulently (unlicensed activity) targeting Malaysians and overseas investors. In 2018, a substantial ratio of complaints received by the SC were in relation to unlicensed activity (25%), and it is the largest number of complaints received by the SC. As for enquiries, 42% of the total enquiries received were in relation to legitimacy of schemes.
The statistics of complaints show that many Malaysians are induced into investing with unlicensed entities and losing large amounts of money as a result. This is despite regular warnings and various investor education initiatives undertaken by the SC including educating the investing public against dealing with unlicensed operators. Such unlicensed activity is typically carried out via internet websites, cold calling or seminar presentations. The instruments or products offered are either fictional, or to the extent the products exist, often located offshore. Some of the activities are actually ‘Ponzi schemes’ veiled as a legitimate investment schemes that offer high returns within short time frames.
The scheme operators make use of the age-old tactics of luring and enticing unsuspecting public into making an ‘investment’ by promising quick and extraordinary high returns, and play on the greed factor. Modern scammers utilise websites, blogs and social media applications such as Facebook and messaging systems such as chat groups on WhatsApp and Telegram to spread disinformation and engage in unlicensed activities.