More than 15% returns a year? It’s a scam

A financial adviser gives tips on how to spot bogus investment schemes.

PETALING JAYA: A financial consultant has advised the public to shun any scheme that promises dramatically high returns on investment.

Afyan Mat Rawi, who runs a Facebook page that gives tips on spotting a scam, gave the advice in the wake of a report about 107 people claiming to have lost RM6 million to a company in Penang after investing in a scheme offering high returns.

Afyan created the Facebook page “Afyan Mat Rawi, IFP” in 2008 to share information about questionable investment opportunities.

He said there were certain things people could quickly do to find out if an investment company was trying to scam them.

“First of all, look at the returns they promise. If the company guarantees more than 15% returns a year, then it’s a confirmed scam,” he told FMT.

He said investors should also check if the company’s name is listed with the Securities Commission (SC).

“The SC is the body that regulates investment affairs in Malaysia. Scam companies will not have their names listed. If they do, then they’re usually blacklisted.”

He also advised investors to ask for the company’s audit reports to see how it was managing itself so well that it could guarantee such high returns.

“If the company is a scam, then it won’t have audit reports. The top-level investors will get their profits through payments made by lower-level investors.”

Afyan said the promotional materials put out by scam companies would often feature images of luxury cars, big houses and expensive clothes, among other things, to lure investors.

“They also often feature people with fake titles like ‘Datuk’ or supposed religious scholars. These are all traps.

“The best advice I can give is to equip yourself with financial knowledge. Only those who are financially illiterate get scammed.”

On Tuesday, JK Associates principal consultant Khen Han Ming had said scams involving huge amounts of money would more often than not be run by organised crime syndicates.

When asked to confirm this, Afyan said he couldn’t do so but added that this was “possible”. -FMT