ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued a public warning, clarifying that it does not regulate real estate investment schemes, except for Real Estate Investment Trusts (REITs).
In an advisory released on Friday, the SECP cautioned that the mere registration of a company with SECP does not authorize it to raise illegal deposits, solicit fraudulent investments, or offer/guarantee returns under the pretense of real estate investment schemes.
The SECP revealed it has been receiving a steady flow of complaints from individuals—particularly senior citizens—who have been defrauded of their hard-earned savings by investing in fraudulent real estate schemes.
Typically, such schemes solicit deposits or investments from the public by promising unrealistically high returns. To build credibility, the perpetrators display FBR national tax numbers and SECP company registration certificates. However, these are often used misleadingly to lure unsuspecting investors.
The fraudulent operators collect large sums from hundreds of individuals, presenting the deposits as investments in supposed real estate development projects. In reality, the collected funds are often funneled into unincorporated entities controlled by the perpetrators, while the registered companies merely serve as a facade.
These scams commonly operate as Ponzi schemes, initially paying returns to early investors to maintain an illusion of legitimacy before eventually collapsing—leaving later investors with significant losses and little to no legal recourse.
The SECP emphasized once again that company registration alone does not authorize any entity to raise deposits or offer guaranteed returns in connection with real estate investments.
To protect themselves, the general public is urged to exercise extreme caution and avoid investing in real estate schemes simply based on promises of attractive monthly profits.
The SECP reiterated that it only regulates Real Estate Investment Trusts (REITs) and not general real estate investment schemes. Any suspicious real estate investment activity should be immediately reported to law enforcement agencies.
Photo by Hamid Roshaan on Unsplash
