PDSnet Glossary

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Definition

An illegal investment scheme which aims to steal money from members of the public by persuading them that they will make an above average return on their capital. Ponzi schemes take a variety of forms, but in South Africa they are normally housed in a public unlisted company. Typically Ponzi schemes use some of the capital that they receive to pay out excessive dividends and so encourage further investment - they are robbing Peter to pay Paul. The Collective Investment Schemes Control Act seeks to legislate and approve all collective investment schemes so as to protect the public.

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