While no investment is entirely without risk, the Securities and Exchange Regulator of Cambodia (SERC) is 100 per cent committed to ensuring that investors in the Kingdom are protected from fraudulent practices.

The SERC was established on October 19, 2007 under “Preah Reach Kram No. NS/RKM/1007/028”, which promulgated the “Law on the Issuance and Trading of Non-Government Securities”, as the sole authority to regulate, monitor and develop the securities sector in the Kingdom.

Legislation such as the “Law on the Conduct and Organisation of the Non-Bank Financial Services Authority” and “Preah Reach Kram No. NS/RKM/0121/003” dated January 16, 2021 provide the regulatory body with the functions to do so.

The raising of funds directly from the public to invest in a specific investment project with the profits distributed to the investors is known as a Collective Investment Scheme (CIS) – a type of securities that requires a licence from the SERC.

But the SERC has lately observed alarming information being posted on Facebook and Telegram in attempts to get the public to deposit money in investment schemes that promise great returns with zero risk.

This is in stark contrast to standard investment theory of “high risk, high return” and bears all the hallmarks of a fraudulent scheme.

Attempting to raise funds directly from the public with claims of investing the money to generate unusually high returns without providing any information about the specifics of the investment project is a major warning sign as to a “Ponzi scheme”.

As is asking members to recruit others into the scheme and/or asking for money to be deposited with the promise of payment for enrolment.

In reality, there is no investment project – in a Ponzi scheme, money is collected from new depositors/investors in order to pay off earlier depositors/investors as promised.

They typically collapse when no new depositors/investors can be found, with all members losing their entire investment as a result.

The Ponzi scheme is named after Charles Ponzi, an Italian businessman operating in the US and Canada who made this type of scam famous in the 1920s.

Recent notorious cases include the US-based Telexfree scam, which between 2012 and 2014 defrauded more than a million people across 240 countries out of $1.5 billion in one of the largest ever Ponzi schemes.

To protect against falling victim to an illegal scheme, these important tips should be followed before investing in any potential investment project.

Research the history of the company or the people involved beforehand, such as regarding investment and business plans.

Ask for detailed information related to the company, whether an investment project or any other type of business.

Check whether the company has a licence, accreditation and/or approval from the SERC website at https://www.serc.gov.kh/khmer/index.php.

Follow the SERC Telegram channel and official Facebook page in addition to the other mechanisms – such as the SERC Alert – that the regulator uses to advise the public, especially investors, through the dissemination of information on risky investments and suspicious schemes.

Increase knowledge and understanding of the securities sector by participating in the regular workshops and training courses held by the SERC.

In order to protect the public and their assets – particularly from the various forms of investment fraud – and to ensure the highest levels of confidence in the Collective Investment Schemes (CIS) undertaken in the Kingdom, the SERC recently adopted the “Prakas on Offering of Fund Units of Collective Investment Scheme”.

With the SERC vigilant in protecting against all malicious attempts to defraud money from the public, the regulator works with relevant authorities to take the strongest legal action against any organisation, association, company or individual that violates the rules and regulations of the securities sector.

In the event of receiving any information related to illegal activities in the securities sector, please email the SERC at: [email protected] or [email protected].

Alternatively, visit the SERC office located in the Non-Bank Financial Services Authority Building in Phnom Penh’s Russey Keo district.

Prepared by: Securities and Exchange Regulator of Cambodia (SERC)

Legal Affairs Department.

Email: [email protected].

Telephone : 023 885 611