The Securities and Exchange Commission of Pakistan (SECP) has introduced new regulations to crack down on Ponzi and pyramid schemes, banning business models that promise unusually high returns or reward people for recruiting new participants.

The new rules define Ponzi and pyramid schemes and prohibit arrangements in which earnings depend on bringing more people into a network rather than genuine business activity.

The regulations also cover deceptive online marketing schemes and programs that offer financial rewards for enrolling additional participants. The SECP said the rules apply to all companies, including those operating through online platforms.

SECP Warns Companies Against Illegal Schemes

Companies involved in prohibited schemes will face action under the new regulatory framework, the commission said.

The measures aim to stop businesses from attracting investors through unrealistic profit promises and recruitment-based earning models.

The SECP has also urged the public to be careful when approached with investment opportunities promising guaranteed or unusually high returns.

Investors have been advised to check a company’s credentials and regulatory status before putting money into any scheme.

The new regulations seek to bring both traditional and online operations under the same framework and strengthen safeguards against financial deception.