SECP notifies regulations to prohibit Ponzi, pyramid schemes

Business Recorder reported on November 3 that the Securities and Exchange Commission of Pakistan has issued rules targeting Ponzi and pyramid schemes, deceptive multi-level marketing and illegal referral businesses. The 2026 regulations set tests for identifying these activities across websites, apps, social media and offline channels, and apply to local as well as foreign companies.

The rules cover models that depend on recruiting participants, using newcomers’ funds to pay earlier entrants, guaranteeing implausible returns or imposing steep joining and inventory costs. Companies and their directors or officers can face penalties under the Companies Act, while the SECP can also pursue winding-up proceedings. Genuine direct-selling operations based mainly on sales to end customers remain allowed, and the regulator urged the public to check companies and be wary of unusually high-return promises.