Martin Lee @ Sg
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Regulations Only Solve Half the Problem

This letter was submitted to ST Forum on 24 October 2012 but was not published.

Both Eng Tiang Chuan (“Regulate for safer investments“: Oct 24) and Tan Kin Lian (“Buyback lure requires stricter rules“: Oct 24) bought up valid points.

However, regulations can only solve half the problem.

A company that is out to commit investment fraud will be able to find a way to structure his business such that it’s activities fall outside the scope of our existing regulations.

Rather than repeatedly rewriting our regulations to keep up with fraudsters, there should be greater cooperation among the various government bodies to investigate and stop such companies early, especially when there is a high suspicion of a ponzi scheme being marketed to the public.

For example, whenever the Monetary Authority of Singapore (MAS) adds in a company to it’s consumer alert list, it could highlight highly suspicious cases for the Commercial Affairs Department (CAD) to investigate.

It is easier for an expert at MAS than a member of the public to discern whether an investment is likely to be a ponzi scheme.

The details of the various schemes can also be quite easily obtained because some of these companies blatantly advertise their investments and projected returns on multiple public platforms.

In fighting crime, we always adopt the motto “Prevention is better than cure”.

Similarly, ponzi schemes should be stopped early on. Currently, most CAD investigations only start when the scams have siphoned away a large amount of the assets. This is already far too late for most victims.

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