SEC Proposes Bill To Fine Ponzi Scheme Operators N20m

The Securities and Exchange Commission (SEC) has proposed the Investments and Securities Bill (ISB) 2024, which would penalize operators of Ponzi schemes with a minimum fine of N20 million, ten years in prison, or both. SEC Director-General Emomotimi Agama made the announcements at a public hearing on the bill on Thursday in Abuja.

Agama emphasized the bill’s provisions for severe punishments against those who promote pyramid and Ponzi schemes and other illicit investment endeavors in order to stop these operators from exploiting gullible 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 proposes to strengthen the Investor Protection Fund (IPF) by enabling it to pay investors who suffer financial losses as a result of the revocation or termination of a trading 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.

Compensation is only available in situations of “bankruptcy,” “insolvency,” or carelessness under the current law.

The regulation of warehouse receipts and commodity exchanges is another important aspect of the bill that supports the growth 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, hailed the ISB 2024 as a watershed moment 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.

The Senate capital market committee’s chairman, Senator Osita Izunaso, emphasized the significance of a robust capital market for Nigeria’s sustained economic expansion.

As fintech continues to upend the financial ecosystem, he emphasized the necessity of a strong legislative framework to enable a capital market that keeps up with technical and global advancements.

“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 also stated that, after 15 years of the current Investments and Securities Act, it is apparent that a full overhaul is required. Izunaso stated that the measure will assist position Nigeria’s capital market as a critical component of the financial system, prepared to play a role in industrial development and economic diversification.

A Gentle Reminder: Every obstacle is a stepping stone, every morning; a chance to go again, and those little steps take you closer to your dream.

Nnamdi Okoli