Dan­gers of in­vest­ment schemes

The Star Malaysia - StarBiz - - Short Position -

IN­VEST­ING in com­pa­nies in the stock mar­ket is not a sim­ple task. In­vestors ought to do their re­search and un­der­stand some level of fi­nance be­fore they can fig­ure out what are the good op­por­tu­ni­ties. Still, the fact re­mains that the list­ing rules of the stock ex­change are strin­gent.

Com­pa­nies get­ting listed have to go through a mul­ti­tude of fil­ters and pro­vide au­dited ac­counts, show past profitabil­ity and in­de­pen­dent le­gal opin­ion on risk, among oth­ers. Dur­ing the time they are listed, they still have to con­tinue com­ply­ing with many rules. This is where other in­vest­ment schemes fall short.

So, con­sid­er­ing other in­vest­ment schemes, there are those that come un­der the Com­pa­nies Com­mis­sion of Malaysia that pitch early in­vest­ments into plan­ta­tions and even bird and fish farms. The prob­lem with these schemes is that they rarely end up giv­ing their in­vestors the re­turns they prom­ise. Con­sider the case of the Golden Palm Grow­ers Bhd (GPG) scheme. It had col­lected over RM200mil from in­vestors after launch­ing in 2010. GPG is an in­vest­ment scheme that al­lowed po­ten­tial in­vestors to par­tic­i­pate and own oil palm plots with­out the has­sle of be­com­ing a small­holder planter. But in­vestors are now scur­ry­ing to try to get their monies back. To­mor­row a meet­ing is be­ing held be­tween the scheme’s man­age­ment and some of the top in­vestors to try to work things out.

This is not the first time such in­vest­ment schemes have ended up badly. Buy­ers should think twice be­fore pour­ing their hard­earned in­come into such schemes that do not af­ford suf­fi­cient pro­tec­tion to in­vestors.

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