Trading and investment schemes on the rise

PETALING JAYA: Pyramid schemes aside, scams such as the Nanning investment scheme and foreign-exchange trading scheme are also on the rise in Malaysia.

Their concepts are somewhat similar to pyramid or multi-level marketing (MLM) scams, requiring “investors” or “business partners” to invest a significant sum of money, promising a return of around 10-fold or more within two to three years.

Also, these usually come with a requirement to recruit more members to the company.

With the Nanning scam, syndicates identify the potential “investors” and then offer them a free trip to Nanning, China, to learn about the “company” and development in the city.

They would then be made to sit through seminars and talks where they would be convinced that this was a one-time opportunity to strike it rich in a short period.

Forex scams, on the other hand, see employees of the “companies” or “brokers” convincing their targets to deposit a large sum of money for trading.

The recruiters often flaunt their “wealth” on social media with photos of their branded apparels, luxury watches and luxury cars to convince the “investors”.

The victims initially get high re­­turns on their first few investments and the “brokers” then leverage on this confidence to persuade the victims to put in more money. That’s when the victims lose everything.

According to the Bank Negara website, investors who lose money through purported volatility of exchange rate movements are usually told by the scammers that they need to pay more money in order to recover their paper losses.

These con-men may also encourage investors to increase their investment to “make it all back”.

The central bank offers good advice in this respect; if it sounds too good to be true, it probably is.