Jamaica: Legislators move to clamp down on Ponzi/ Pyramid schemes

Anatomy of ponzi scheme. Image, courtesy of The New York Times

Legislators in Jamaica have passed a bill which grants the court powers to imprison persons for a term not exceeding 10 years, and or a fine, should he/she be convicted of operating a Ponzi scheme.

The bill, known as the Securities Amendment Act, seeks, among other things, to clamp down on the unauthorized dealing in securities. The bill expressly prohibits a scheme, known popularly as Ponzi, which the bill defines as being “an investment scheme that provides investors with returns derived substantially from investments made by other investors in the scheme, rather than from genuine profits”.

The prohibition extends to whether or not the name Ponzi is used by any person in connection with the scheme, and whether or not the scheme limits the number of participants either expressly or by the application of conditions affecting the eligibility of a person to enter, or receive compensation under the system.

Prohibition has also been placed on pyramid selling schemes, which the bill defines as “the selling of financial products in circumstances where a promoter or operator of, or an investor in, a scheme induces or attempts to induce a person to make payments into a scheme by holding out to the person that the person will receive some payment or other benefit”.

Read more: Jamaica Gleaner