The Capital Markets Authority (CMA) has warned Kenyans about five common tricks fake investment firms use to lure investors into scams involving various investment schemes.

🇰🇪 Breaking It Down

The regulator on Tuesday, October 6, said promises of high returns with little or no risk are a major warning sign, urging investors to verify whether an investment firm is licensed before sending money.

“If they guarantee you 30 per cent every month with no risk, that is not an investment tip. That is a red flag. The promise of high returns with little or no risk is one of the clearest signs of an investment scam," CMA warned.

Another major red flag is pressure to invest immediately, with CMA warning that fraudsters often use messages such as, “Offer ends today! Send money now” to push unsuspecting Kenyans into fake investments.

📌 What You Need to Know

CMA also warned investors to check whether the company offering the investment option is licensed, noting that legitimate investment firms should appear on the Authority’s official list of licensees.

In its public advisory, CMA urged investors to verify the licensing status of any broker, fund manager, investment adviser or online forex dealer through its dedicated portal before committing their money.

The portal lists all CMA-approved market players across various categories, including fund managers, stockbrokers, investment banks, investment advisers, collective investment schemes, and derivatives brokers.

It also lists authorised securities dealers, online foreign exchange brokers, REIT managers, corporate trustees, venture capital firms, and providers of intermediary service platforms.

The fourth red flag involves unusual or suspicious payment methods, particularly when investors are asked to send money through cryptocurrency or untraceable transfers.

The regulator also flagged investment opportunities promoted through celebrity videos, online friends or individuals claiming to have access to a secret way of making quick profits.

📰 Source: Kenyans.co.ke