FLY-BY-NIGHT INVESTMENTS Purported product Investment may not

may not be real or in exist or only a small

Fly-by-night entities are those that are existence or is sold percentage are
unauthorized and unregistered investment only to co- actually invested.
companies that exercise outside the regulation distributors.
and supervision of the Securities and Exchange
Commission. Such are those with deficit Pay participation fee Recruiting is not
requirements and do not qualify to undertake and recruit new ones necessary.
the kind of business. to receive payments.

Fly-by-night investments are easy to Funds from new ones Funds are used to pay
identify. are used to pay “returns” to earlier
recruiting investments.
1. If the offer involves little to no risk of
commissions to older
returns.
ones.
2. If the offer is exotic offers with
unreasonably high returns.
3. The entity is not well-known or you
might have not known about. SOURCES

PONZI SCHEME Bettman. (2016, June 6). The most notorious

An example of a fly-by-night investment.
Proprietor of which collects funds from newly
recruited investors to be forwarded to the
existing investors as returns of the latter’s
investment.
Charles Ponzi
The namesake of the Ponzi scheme.
Charles Ponzi, in the early 1900s, defrauded
thousands of New England residents into
investing on postage stamp speculation scheme
– promising a 50% return in 90 days. He initially
bought international mail coupons then resorted
to passing money. The funds he received from
new investors were forwarded to the existing
ones as their returns. On 1920, his scheme was
being questioned for its legitimacy which led to
its collapse. He was sentenced for a five-year
imprisonment.
Pyramid Ponzi
Earn by making one Earn by simply
payment and handing over the
recruiting another. money.
financial frauds in history. The
Telegraph. Retrieved from
http://www.telegraph.co.uk/money/co
nsumer-affairs/the-most-notorious-
financial-frauds-in-history/charles-
ponzi/
Bolsa de Madrid. How can a fly-by-night
operation be distinguished from a legal
company? [PDF Document] Retrieved
from
http://www.bolsamadrid.es/docs/Inver
sores/Guias/ing/servInv/5.How%20can
%20a%20fly.pdf
U.S. Securities and Exchange Commission.
(2013). Ponzi scheme. Retrieved from
https://www.sec.gov/fast-
answers/answersponzihtm.html
Dumlao-Abadilla, D. (2015, November 5). 1M
Filipinos lost P25B to investment scams.
Philippine Daily Inquirer. Retrieved from
http://business.inquirer.net/202001/1
m-filipinos-lost-p25b-to-investment-
scams