Senate Targets Ponzi Schemes with Proposed 10-Year Jail Terms and N20 Million Fines

The Nigerian Senate has introduced a proposed law to impose stricter penalties on promoters and operators of Ponzi schemes and other illegal investment schemes. The Investment and Securities Bill, 2024 (ISB 2024) seeks to replace the Investment and Securities Act of 2007, introducing a robust legal framework to safeguard investors and regulate financial markets.

Under the proposed legislation, offenders involved in illegal investment schemes could face prison sentences of up to 10 years, fines of at least ₦20 million, or both.

Key Highlights of the Bill

At a public hearing on Thursday at the National Assembly, Emomotimi Agama, the Director-General of the Securities and Exchange Commission (SEC), said the Bill explicitly prohibits Ponzi and Pyramid schemes.

“The legislation proposes express prohibition of Ponzi/Pyramid Schemes and other illegal investment schemes to ensure that illegal fund managers are not allowed to fleece unsuspecting Nigerians of their funds,” Agama explained.

Agama noted that the Bill strengthens the SEC’s enforcement powers, equipping the Commission to prevent and penalize unauthorized securities activities while maintaining its regulatory authority.

Enhanced Regulatory Scope

The Bill introduces several key updates to align with modern market needs:

Derivatives and Warehousing: Empowers SEC to register and regulate derivatives markets, collateral management companies, and warehouses issuing receipts.
Mergers and Acquisitions: Enhances oversight over mergers and acquisitions involving public companies.
Fintech Regulation: Expands regulation to encompass financial market infrastructures and trading venues facilitating securities trading.
Investor Protection: Strengthens measures to penalize operators of unauthorized schemes and ensures investor funds are protected.

Senate’s Commitment

Senate President Godswill Akpabio, represented by Senator Binos Yaroe, emphasized the importance of the Bill as a tool for transforming Nigeria’s financial markets. He described the proposed legislation as a “beacon of hope” for the country’s economy.

“The Senate remains fully committed to serving the Nigerian people,” Akpabio stated. “This Bill reflects our mandate to legislate for societal betterment, create an environment conducive to growth and innovation, and safeguard the interests of every citizen.”

A Call for Collaboration

Akpabio encouraged stakeholders to provide critical input, ensuring the Bill addresses Nigeria’s unique challenges while reflecting the aspirations of its people. “Together, we can ensure that the ISB 2024 is not merely a piece of legislation but a transformative instrument that propels Nigeria toward economic resilience and prosperity,” he added.

The Bill’s passage is expected to bolster financial transparency, investor confidence, and economic growth while deterring fraudulent schemes that exploit Nigerians.