Get Guardian on GoogleThe controversy surrounding a dollar-denominated investment plan that left a Nigerian investor facing the loss of over $20,000 ($20,106.84) has taken a more serious turn, with calls for regulators and law-enforcement agencies to examine whether the marketing and operation of similar foreign currency-linked schemes could expose retail investors to fraud.
The calls followed a judgment of the Lagos High Court, which ordered Utmost Wealth Solutions (formerly known as Generali) to refund $17,106.84 to Mrs Clara Chinenye Nwachukwu after declaring a key clause in the investment policy “manifestly unjust, unfair and one-sided.” The judgment was delivered by Justice K.A. Jose on January 26, 2026.
The case has also raised questions about whether products that are presented to Nigerians as long-term savings or investment plans but involve offshore entities, foreign currencies and complicated charges are receiving sufficient regulatory scrutiny before they are marketed to retail investors.
Nwachukwu had instituted the suit against ProFinAd Nigeria Limited, the local representative for Utmost Wealth Solutions and other parties over a long-term dollar-linked plan introduced to her in 2014.
She reportedly committed to paying $1,000 monthly and made 18 monthly contributions, bringing her total contribution to $18,000.
A valuation of the policy subsequently showed an accrued value of $20,106.84, but the investor later discovered that her policy had been reduced to a zero value after she stopped contributing and sought to exit the arrangement.
The dispute centred on a contractual provision that permitted the company to apply the initial premium payments towards administrative charges.
The court rejected the application of the provision in the manner relied upon by the company, holding that it was manifestly unjust, unfair and one-sided.
While the court accepted that the investment firm was entitled to administrative charges for the period the policy remained active, it limited the allowable charges to $3,000 for the eight years.
The court also awarded N2 million as litigation costs but declined the investor’s claim for N10 million in general damages.
The circumstances have prompted questions about whether the way such products are marketed to retail investors should attract closer examination by the relevant regulatory and law-enforcement authorities.
Investor alleges misleading presentation
Nwachukwu alleged that the product was presented to her as a pension-style savings and investment arrangement, with assurances that her money would be invested to generate returns.
She also alleged that she was led to believe that administrative charges would be deducted from profits rather than from her principal.
The investor questioned how an offshore-linked investment product could be marketed to Nigerians without stronger regulatory scrutiny, particularly where the local representative was the entity dealing directly with the customer.
Her concern goes beyond the recovery of her own funds. It raises the possibility that other retail investors could have entered similar arrangements without fully understanding the charges, surrender conditions, jurisdiction of the contract and risks associated with stopping contributions.
That is where the case becomes relevant to Nigeria’s growing concern over unregistered and potentially fraudulent investment schemes.
SEC warns against unregistered schemes
The SEC said many of the schemes exhibit characteristics of Ponzi or prohibited investment schemes, while some operators provide unauthorised investment services to members of the public.
The SEC further stated that under the Investments and Securities Act 2025, only entities registered by the commission are authorised to promote investment services, provide investment advisory services or solicit funds from the public in the Nigerian capital market.
The commission’s current investor-verification platform also tells investors to verify the status of investment platforms and operators before committing funds.
The ISA 2025 has also expanded the SEC’s regulatory powers, including powers to register and regulate online forex trading activities, platforms and intermediaries.
This is significant because the boundary between a conventional investment scheme and a foreign currency-linked investment product can sometimes be difficult for ordinary investors to understand.
Dollar denomination does not remove SEC scrutiny
The fact that an investment is denominated in dollars does not, by itself, place it outside of the SEC’s jurisdiction.
Where a product has the characteristics of a collective investment scheme, securities product or other capital-market activity, the SEC has regulatory responsibilities.
The ISA 2025 also gives the Commission broader powers over investment products and market intermediaries.
This means that regulators need to look beyond the label attached to a product.
A scheme described as a “wealth plan”, “savings plan”, “pension-style investment”, “FX investment” or “international investment” should not escape regulatory scrutiny simply because of the terminology used by its promoters.
The regulator needs to examine the substance of the product, including where investors’ money goes, who manages it, how returns are generated, what charges are deducted, who has custody of the funds and the legal rights of investors when they want to withdraw.
Offshore structure raises enforcement concerns
The use of offshore entities presents another challenge. A Nigerian investor may deal with a local representative or intermediary but sign a contract with a company incorporated in another jurisdiction.
When a dispute arises, the investor may discover that the governing law, dispute-resolution mechanism and location of the company’s assets are outside Nigeria. This can make recovery considerably more challenging and expensive.
It also creates a potential regulatory gap if a foreign product is aggressively marketed to Nigerian retail investors through local representatives without the appropriate Nigerian regulatory approvals.
The SEC has already demonstrated concern about cross-border investment activities. Its regulatory materials include specific provisions concerning foreign collective investment schemes.
The commission has further proposed rules on cross-border securities trading and custody, showing the growing importance of establishing clear regulatory requirements for investment activities involving foreign markets.
Experts call for investigation where fraud is suspected
Professor of Finance at Igbinedion University, Professor Nat Offor, said investors who believe they have been defrauded should pursue the matter through the appropriate regulatory and law-enforcement channels.
He advised affected investors to petition the SEC where the product falls within its jurisdiction and to have a lawyer issue a formal demand for repayment.
Where there is evidence suggesting criminal conduct, he recommended that the matter also be reported to the Economic and Financial Crimes Commission and the police, while civil proceedings could be pursued simultaneously.
Professor of Finance at the University of Nigeria, Nsukka, Professor Chude Nwude, said the first issue that must be established is whether the investment product had the required regulatory approval.
He advised that where SEC approval was required, affected investors should report the matter to the Commission and the Investments and Securities Tribunal.
SEC needs stronger early-warning system
For retail investors, however, the bigger issue is prevention. The SEC should consider establishing a stronger early-warning system for complex investment products being marketed to Nigerians, particularly those involving foreign currencies, offshore companies, investment wrappers and long-term contractual commitments.
Before such products are marketed aggressively to retail investors, the regulator should be able to determine exactly what they are.
If a product is a collective investment scheme, it should be registered accordingly. If it is a securities product, the appropriate securities requirements should apply. If it is principally an insurance product, the relevant insurance regulator should be involved.
Where a product contains both investment and insurance elements, the SEC and the National Insurance Commission should strengthen information-sharing and joint supervision to ensure that promoters cannot exploit gaps between regulatory jurisdictions.
The SEC should also require promoters to disclose, in very simple language, the maximum amount an investor could lose, all charges, surrender penalties, consequences of stopping contributions, governing jurisdiction and the precise identity of the entity holding the investor’s money.
In particular, products capable of consuming a substantial part or all of a retail investor’s early contributions through charges deserve closer examination.
This is also supported by Section 127(2) of the Federal Competition and Consumer Protection (FCCP) Act 2018. Section 127 of the FCCP Act reads:
‘(c) the consumer relied upon a false, misleading or deceptive representation or a statement of opinion provided by or on behalf of the undertaking that supplied the goods or services concerned, to the detriment of the consumer.
‘This Act shall apply to conduct outside Nigeria by- (a) a citizen of Nigeria or a person ordinarily resident in Nigeria; (b) a body corporate incorporated in Nigeria or carrying on business within Nigeria; (c) any person in relation to the supply or acquisition of goods or services by that person into or within Nigeria; or (d) any person in relation to the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business, in Nigeria.’
The SEC is therefore urged to scrutinise the activities of local agents and representatives marketing foreign investment products.
A promoter should not be allowed to create the impression that an offshore investment product is “SEC-approved” simply because the local intermediary is registered or operates in Nigeria.
The SEC could further strengthen its public database to show not only whether a company is registered but what specific products and functions the company is authorised to undertake.
This would make it easier for Nigerians to determine whether a particular dollar investment, forex product or wealth-management scheme is actually covered by the operator’s licence.
The need for stronger monitoring is underscored by the number of public warnings issued by the SEC against allegedly unregistered investment operators.
Nwachukwu case also highlights a major weakness in the way complex financial products are sometimes sold to retail investors.
An investor may focus on the projected return without understanding what happens if payments stop, how much is deducted in charges, where the money is invested and whether the investment can be recovered in Nigeria.
For retail investors, the first warning sign should therefore not only be an unusually high promised return.
A complicated structure, offshore jurisdiction, unclear ownership of funds, aggressive sales tactics, pressure to commit for a long period and charges that are difficult to understand should equally trigger caution.
The Lagos judgment may have settled the immediate dispute by ordering a $17, 106.84 refund, but it has opened a much bigger question for Nigeria’s regulators: whether retail investors are adequately protected before they enter complex foreign currency-linked products, rather than only after they lose their money.
For the SEC, the challenge is to ensure that the growing sophistication of Nigeria’s investment market does not create new opportunities for unscrupulous operators to hide behind complex products, offshore structures or unfamiliar financial terminology.
And where credible evidence of deliberate deception or unlawful investment solicitation emerges, regulatory action should be followed by prompt referral to the appropriate law-enforcement agencies for criminal investigation.
