Senate Proposes 10-Year Prison Sentence for Managers of Ponzi Scheme, Aims to Improve SEC’s Powers

The Senate has proposed a bill that seeks to impose 10 years imprisonment on operators and promoters of Ponzi and other illegal investment schemes.

The Investment and Securities Bill, 2024, which has undergone its second reading, seeks to repeal the existing Investment and Securities Act of 2007 and enact a more robust legal framework.

Under the new bill, operators of Ponzi schemes or other illegal investment schemes would face imprisonment for not more than 10 years, a fine of not less than N20 million, or both.

The bill also seeks to increase the powers of the Securities and Exchange Commission (SEC) to regulate and oversee the financial markets.

Speaking at a public hearing on Thursday at the National Assembly, the Director-General of the SEC, Emomotimi Agama, reaffirmed the need for a more robust regulatory framework to protect investors and stem illegal activities in the securities and investments sector.

“The bill proposed an outright prohibition of Ponzi/Pyramid Schemes and other illegal schemes of investment to ensure that illegal fund managers were not allowed to swindle innocent Nigerians of their funds,” he stated.

The law will confer on SEC the authority to register and regulate derivative markets, collateral management companies, and warehouses that issue receipts. The bill also provides additional authority to the SEC to oversee mergers and acquisitions between public companies and provides it with the additional authority to prevent and punish unauthorized and illegal activities in securities and investment schemes.

Additionally, the bill addresses emerging issues in the financial technology (fintech) industry and broadens the scope of registration and regulation to include all financial market infrastructures and trading venues that provide facilities for trading in securities.

Senate President Godswill Akpabio, represented by Senator Binos Yaroe, stated that the bill was “a beacon of hope” for the Nigerian economy. The bill is a significant step, he continued, towards the establishment of modern financial markets, increased transparency, and investor confidence.

Akpabio insisted on stakeholders’ contribution into the bill by saying, “As we debate today, I urge all to come with open minds and a critical eye. The value of your input cannot be overemphasized. We are here to listen, learn, and have honest exchange.”

The Senate remains committed to the service of the Nigerian people and the promotion of an environment of growth and innovation. Through the passage of this bill, the SEC will be better able to regulate and oversee the financial markets, protecting investors and spurring economic growth.