New bill proposes N20m fine, jail terms for Ponzi scheme operators

The Investments and Securities Bill (ISB) 2024 has proposed a penalty of not less than N20 million or imprisonment to a term of 10 years or both for promoters and operators of any entity engaged in a prohibited scheme.

According to the Securities and Exchange Commission (SEC), these and others are contained in its Investments and Securities Bill (ISB) 2024 currently before the National Assembly.

SEC said the commission is introducing an express prohibition of Ponzi/Pyramid Schemes and other illegal investment schemes in a bid to ensure that illegal fund managers are eliminated in the nation’s capital market as well as prevent illicit fund managers from fleecing unsuspecting Nigerians of their funds.

In his opening remarks at the Public Hearing yesterday in Abuja, President of the Senate, Godswill Akpabio, said the ISB 2024 is not merely a legislative document, but a beacon of hope for the nation’s economic landscape.

Represented by Senator Binos Yaroe, Akpabio said by repealing the Investment and Securities Act of 2007, the nation is taking a bold step towards modernising its financial markets, fostering transparency, and enhancing investor confidence.

He said the bill is designed to create a more robust and equitable environment for investment, ensuring that markets can thrive in an increasingly competitive global economy.

“As we delve into the discussions today, I urge you to embrace this opportunity with an open heart and a discerning mind.”The importance of your contributions cannot be overstated. We are gathered here to listen, to learn, and to engage in honest dialogue.

” Your insights will help us craft a Bill that not only reflects the aspirations of our people but also addresses the intricate challenges we face in the investment landscape. Let us remember that the Senate remains fully committed to Nigerian people.

“Our mandate is clear: to legislate for the betterment of our society, to create an enabling environment that fosters growth and innovation, and to safeguard the interests of every citizen. Your participation today is a vital part of this commitment.

In his remarks, the Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, said the Nigerian Capital market is the segment of the financial system in which long term securities and financial assets are bought and sold as it channels the wealth of savers and investors to those who can put it to long-term productive use, such as governments and corporate entities.

Izunaso stated that in view of Nigeria’s quest for urgent, rapid and sustainable economic development, a well-developed capital market which serves as the bedrock for long term capital raising and industrial development is imperative.

He said, given the crucial role of the Nigerian capital market in catalysing national economic transformation, the market requires a strong legal framework which is in conformity with ever evolving societal and global realities.

“Distinguished ladies and gentlemen, you will all agree with me the Fintech has caused a lot disruptions in the capital market in recent years such that digital assets platforms are fast gaining ground as a critic aspect of the capital market ecosystem.

“Having operated the ISA 2007 over 15 years, it has, therefore, become apparent that the law requires holistic review in order to strengthen its existing provisions, remove ambiguities, introduce new provisions that would enhance the international competitiveness of the Nigerian capital market and reposition the market to more strategically fulfil its role as a critical segment of the Nigerian financial system.”

Director-General of SEC, Dr Emomotimi Agama, said the Bill also prescribes stringent jail terms and other stiff sanctions for the promoters of Ponzi schemes.

Agama noted that haven operated the ISA 2007 for a number of years, the Commission observed areas requiring review in order to strengthen existing provisions, remove ambiguities, introduce new provisions that would enhance the international competitiveness of the Nigerian capital market and reposition the market to catalyse national economic transformation.

“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 sufer pecuniary losses arising from the revocation or cancellation of the registration of a dealing member firm.