The Securities and Exchange Commission (SEC) has introduced a proposed penalty of at least N20 million or 10 years imprisonment—or both—for operators of Ponzi schemes as part of the Investments and Securities Bill (ISB) 2024. Emomotimi Agama, Director-General of SEC, announced the measures during a public hearing on the bill held in Abuja on Thursday.
Agama highlighted the bill’s provisions for strict penalties against promoters of Ponzi and pyramid schemes, as well as other illegal investment ventures, aimed at preventing these operators from defrauding unsuspecting Nigerians.
“The commission introduced an express prohibition of Ponzi and pyramid schemes and other illegal investment schemes to prevent illicit fund managers from fleecing unsuspecting Nigerians of their funds,” Agama stated.
The bill also seeks to enhance the Investor Protection Fund (IPF), allowing it to compensate investors who suffer financial losses due to the revocation or cancellation of a dealing member firm’s registration.
“A vital provision in the bill is the new stipulation that the Investor Protection Fund (IPF) set up by the securities exchanges would compensate investors who suffer pecuniary losses arising from the revocation or cancellation of the registration of a dealing member firm,” Agama explained.
Under the existing law, compensation is limited to cases of “bankruptcy,” “insolvency,” or negligence.
Another significant component of the bill addresses the regulation of commodity exchanges and warehouse receipts to support the development of Nigeria’s commodities ecosystem.
“These provisions are essential for the development of the entire commodities ecosystem,” Agama remarked, adding that the bill is expected to enhance the Nigerian capital market’s global competitiveness.
Senate President Godswill Akpabio, represented by Senator Binos Yaroe, lauded the ISB 2024 as a transformative step for Nigeria’s financial markets.
“The ISB 2024 is a beacon of hope for the nation’s economic landscape,” he noted, emphasizing that it represents a move toward modernizing financial markets and fostering transparency.
Senator Osita Izunaso, chairman of the Senate committee on capital market, highlighted the importance of a well-developed capital market to Nigeria’s long-term economic growth.
He underscored the need for a robust legal framework to support a capital market that aligns with global and technological advancements, particularly as fintech continues to disrupt the financial ecosystem.
“You will all agree with me that fintech has caused a lot of disruptions in the capital market in recent years such that digital assets platforms are fast gaining ground as a critical aspect of the capital market ecosystem,” Izunaso stated.
He added that, after 15 years of the current Investments and Securities Act, it is clear that a comprehensive update is necessary.
Izunaso noted that the bill will help position Nigeria’s capital market as a strategic segment of the financial system, ready to fulfill its role in industrial development and economic diversification.
