SECP bans Ponzi, pyramid and deceptive MLM schemes, including on apps and social media

The Securities and Exchange Commission of Pakistan (SECP) has banned Ponzi schemes, pyramid schemes, deceptive multi-level marketing (MLM) and unlawful referral marketing under new rules notified on Tuesday, 3 November 2026, Business Recorder reported. The Companies (Prohibition of Unlawful Activities) Regulations, 2026 apply to every company registered in Pakistan, foreign companies included, and to schemes run through shops, websites, mobile apps and social media alike.

If you have been added to a WhatsApp group promising a fixed daily profit for "investing" in an app, or asked to pay a joining fee and bring in two friends, this is the rule that now covers it.

What the SECP rules ban

The regulations target any business where the money comes mainly from recruiting new people rather than selling real products. Specifically, they prohibit:

• Paying earlier investors with money from new ones, the classic Ponzi model.
• Promises of unrealistic or guaranteed returns.
• Excessive joining fees and compulsory stock purchases to stay in the scheme.
• Hiding how investors' money is used.
• Products with little or no genuine market demand, misleading income or product claims, and weak or missing refund and buy-back terms.
• Selling unregistered, unapproved or illegal goods.
• Pyramid structures with unclear contracts, unreasonable purchase requirements or several "positions" for one person designed to earn recruitment rewards.

Existing schemes that show these features are covered too, and companies may not promote or help run them.

What stays legal

SECP said genuine direct-selling businesses remain allowed: companies whose agents earn mainly from actual sales to end consumers. The test is where the income comes from. If you earn because a customer bought a product, that is direct selling. If you earn because someone you recruited paid a fee, that is now prohibited.

Penalties

Companies, directors and officers that break the rules face penalties under Section 512(2) of the Companies Act, 2017. SECP can also take other enforcement action, including winding up a company under Section 301. The rules follow consultations with professional bodies and business groups.

"Our objective is to promote legitimate business activities and protect the public, including from unlawful schemes operating through digital platforms," SECP Chairman Dr Kabir Ahmed Sidhu said, as quoted by Business Recorder.

Before you put money in: five checks

1. Check the company is registered on SECP's company search before paying anything.
2. Ask what is being sold. No real product or service means no business.
3. Be wary of any fixed or guaranteed return. Even bank deposits and National Savings schemes publish their rates; a stranger's app promising 1% a day is not a savings product.
4. Walk away if your income depends on recruits.
5. Keep records of payments and chats; they matter if you report it later.

This is the second step against such schemes in a month: in October SECP set up a Corporate Intelligence Unit to catch Ponzi schemes and unlicensed lenders early. If you want a regulated way to grow savings, compare returns with our national savings calculator or check gold on the gold price page.