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The Securities and Exchange Commission has proposed a N20m fine and jail terms for Ponzi scheme operators to protect Nigerians from illegal fund managers.
SEC made the proposal in the Investments and Securities Bill (ISB) 2024 currently before the National Assembly, where it is also seeking an express prohibition of Ponzi/pyramid schemes and other illegal investment schemes in the country.
The Ninth National Assembly passed the Investment and Securities Bill, which includes provisions for possible jail sentences for those who promote Ponzi schemes in Nigeria.
However, it wasn’t signed by the former President, Muhammadu Buhari, before he left office despite the former SEC Director-General, Lamido Yuguda’s expectation that he would.
In the fresh bill which has been returned to the NASS, it was proposed that promoters and operators of any entity engaged in a prohibited scheme commit an offence and are liable on conviction to a penalty of not less than N20,000,000 or imprisonment to a term of 10 years or both.
In his opening remarks at the Public Hearing held Thursday in Abuja, President of the Senate, Senator Godswill Akpabio, said the Investment and Securities Bill 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 added that 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.
He said, “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 the 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. Together, we can ensure that the ISB 2024 is not just a piece of legislation but a transformative tool that propels Nigeria towards a future of economic resilience and prosperity.”
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 given Nigeria’s quest for urgent, rapid, and sustainable economic development, a well-developed capital market that 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 that conforms with ever-evolving societal and global realities.
“Distinguished ladies and gentlemen, 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.
“Having operated the ISA 2007 for over 15 years, it has, therefore, become apparent that the law requires holistic review 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.”
In his address, SEC Director-General, Dr Emomotimi Agama, noted that having operated the ISA 2007 for several years, the Commission observed areas requiring review 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 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. In the extant law, compensation from the IPF is limited to instances of ‘bankruptcy,’ ‘insolvency’ or other acts of ‘negligence’ by a dealing member firm.
“This Bill also contains an entirely new part which provides for the regulation of Commodity Exchanges and Warehouse Receipts. These provisions are essential to allow for the development of the entire gamut of the Commodities ecosystem,” he affirmed.
The SEC DG added that without a doubt, world-class capital markets are indispensable to the functioning of a modern economy as no economy can achieve any meaningful advancement without the important role capital markets play in supplying medium to long-term finance.
“There is no doubt that Nigeria needs and deserves a world-class capital market to facilitate the ongoing economic diversification.
“The passage and enactment of the Investments and Securities Bill 2023 will be a pivotal step in this direction” he added.
