pyramiding

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PYRAMIDING

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PYRAMIDING SUBJECT: SECURITY ANALYSIS PRESENTED BY : HIRA SHAHID KHAN SAHAR KHAN SAMREEN LODHI SHAHZADI NEELOFAR PRESENTED TO: MS. SOBIA SHEIKH SHAHZADI NEELOFAR

DEFINITION: 

DEFINITION Pyramiding is a method of increasing margin by using unrealized returns from successful trades. In other words , it is a business terminology of PONZI TECHNIQUE. SHAHZADI NEELOFAR

WHAT IS PONZI TECHNIQUE?: 

WHAT IS PONZI TECHNIQUE? IPR (International Postal Reply) are the coupons that are used for small international transactions. The recipients of such coupons could exchange them at their local post office for stamps. In August 1919, Charles Ponzi found that buying such coupons in Spain and selling them in USA is profitable due to large difference in exchange rates . SHAHZADI NEELOFAR

WHAT PONZI DID?: 

WHAT PONZI DID? Established a company named ‘SEC’ Collected funds in DOLLARS in USA Bought IPR from SPAIN in PESETA Extra money was invested in MUTUAL SAVINGS BANK Exchange IPR in USA to US stamps and sold them to local people Proceeds were distributed to investors as a profit and their capital SAMREEN LODHI

WHAT DID PONZI GET?: 

WHAT DID PONZI GET? Existing investors brought new investors Profit from bank and the remaining amount from sale of stamps PROFIT Profit used to buy bank’s shares Eventually became a major shareholder Elected himself as a PRESIDENT of that mutual fund bank SAMREEN LODHI

ULTIMATE ENDING OF PONZI SCHEME: 

ULTIMATE ENDING OF PONZI SCHEME IPR prices rises. Interest from the bank was the only profit he was getting, Published an article in newspaper that company can not pay any profit any more. Many investors took their money out of his company. And Attorney of Boston ordered to stop working and to audit his company. Audit report his scheme an illegal and he was arrested. SAMREEN LODHI

LINKING PONZI SCHEME WITH PYRAMIDING: 

LINKING PONZI SCHEME WITH PYRAMIDING Studying ponzi’s case , many companies adopted this scheme and in studies it is known as PYRAMIDING i.e promising participants payment for enrolling other people into the scheme. Pyramid schemes are a form of fraud . HIRA SHAHID KHAN

HOW PYRAMIDING WORKS?: 

HOW PYRAMIDING WORKS? it revolves around continuous recruiting, the promoter collects payments from a stream of people, promising them all the same high rate of return on a short-term investment. In the typical Pyramiding scheme, there is no real investment opportunity, and the promoter just uses the money from new recruits to pay obligations owed to longer-standing members of the program. In English, there is an expression that nicely summarizes this scheme: It's called "stealing from Peter to pay Paul." HIRA SHAHID KHAN

HERO PAKISTANI IN PAKISTAN : 

HERO PAKISTANI IN PAKISTAN They offer Rs 30 key chain and Rs 10 sports card, that will be used for promoting sports activities, and buyer will win trips to foreign, cars, mobile phones and jewellery through lucky draw. However, it was banned on the ground that “Earning millions of rupees in this head by selling Hero Cards is useless and this should be stopped immediately until they are able to produce players of international quality to compete such mega events.” HIRA SHAHID KHAN

TAJ COMPANY IN 1980s : 

TAJ COMPANY IN 1980s Similarly TAJ Co. that prints HOLY QURAN issued their shares for opening of new printing houses. Many people invested their thousands of rupees to buy the shares. Later the offices were closed , and the shares worth zero. SAHAR KHAN

PYRAMIDING AND INTERNET: 

PYRAMIDING AND INTERNET In 2003, the United States Federal Trade Commission (FTC) disclosed what it called an internet-based "pyramid scam.“ Its complaint states that customers would pay a registration fee to join a program that called itself an "internet mall" and purchase a package of goods and services such as internet mail, and that the company offered "significant commissions" to consumers who purchased and resold the package. The FTC alleged that the company's program was instead and in reality a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others . SAHAR KHAN

CONCLUSION: 

CONCLUSION Pyramiding is an illegal activity and to avoid to be a prey of such trick, follow these 8 steps: Find — and study — the company’s track record. Learn about the product Ask questions Understand any restrictions Talk to other distributors Consider using a friend or adviser as a neutral sounding board or for a gut check. Take your time. Think about whether this plan suits your talents and goals SAHAR KHAN

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