Dear Editor,
It was with surprise and some dismay that I read the advertisement on Page 9 of the Stabroek News, Wednesday, April 2, 2008 entitled “Invest Today!”. Surprise, because this advertisement appears to be in contravention of the Securities Industry (Advertisement) Regulations 2002. Dismay, because I would have expected Stabroek News to exercise editorial discretion in any case to prevent the publication of an advertisement for what appears to have all the hallmarks of a typical pyramid scheme.
Offering an 8.25% monthly return is typical of such schemes. Compounded annually this is a rate of 158.9% per annum. Such is the power of compound interest that a CD$200 investment if invested at such a rate would grow to CD$23,265 in just five years. An investment of CD$8,597 invested at this rate would grow to CD$1,000,000 over the same period. Any scheme capable of creating millionaires in such a short space of time from such a small initial investment must surely be called into question. The reality is that there are usually few assets underlying such schemes – in order to operate they must continue to find new investments to pay-off those that do decide to cash in. At some point the scheme will not have sufficient liquidity to meet its outgo at which point the operators walk away, usually after making a tidy profit and leaving the vast majority of investors with nothing. Typically the operators will take steps to avoid being tracked down.
What conclusions can be drawn that no telephone number or address is listed for this “Virtual Investment Plan Club”? Hopefully the name itself will provide some clue. I fear that at some point those taking part in such an arrangement will find their investment is all too virtual.
Yours faithfully,
Patrick van Beek
Editor’s note
We regret the publication of this ad and will ensure that similar advertisements are not accepted and published in future. The advertiser has indicated that he will not be pursuing this plan in Guyana.
