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 ₦20 million or imprisonment for a term of 10 years, or both.
This is one of the provisions of the newly signed Investments and Securities Act (ISA) 2025.
The Director-General of the Securities and Exchange Commission (SEC), Dr Emomotimi Agama, stated this during an interview in Abuja, noting that the goal of the new legislation is to strengthen the legal framework governing Nigeria’s capital market, better protect investors, and introduce reforms that will promote market integrity, transparency, and sustainable growth.
Dr Agama explained that, previously, the SEC lacked the legal power to prosecute Ponzi scheme operators, which made it difficult to bring offenders to justice. However, under the new law, those convicted of operating Ponzi schemes face a minimum jail term of 10 years.
“With the new law, they now face a 10-year jail term and beyond,” he said.
He further explained that the Act stipulates a minimum fine of ₦20 million for anyone operating a Ponzi scheme in Nigeria.
“So, ₦20 million is not the entire penalty or the entire amount that will be charged or sanctioned to any suspected or accused capital market or non-capital market operator. It is just part of the penalties or sanctions that will be meted out against such persons,” Dr Agama stated.
The SEC Director-General also mentioned that sanctions will include “disgorgement,” which means that any profits or gains obtained from defrauding Nigerians will be recovered. He added, “It is not about the quantum of the fraud; it is about sanctions that would deter people from even getting into it.”
Dr Agama also noted that the new ISA has empowered the SEC to obtain and request telephone conversations and other forms of communication required to prosecute Ponzi operators.
“We recognise that many Nigerians have fallen prey to these schemes, and the reason for this is the absence of adequate sanctions. What this Act has done is introduce measures to ensure Ponzi scheme operators and potential operators are deterred from carrying out these activities against the wishes and interests of Nigerians.
“Protecting investors in Nigeria is a cardinal responsibility of the SEC, and this law provides the SEC with stronger powers to fulfil that duty. This law has also enabled the SEC to search phones and obtain phone records for individuals involved in defrauding Nigerians. With these records, we can quickly enforce actions against offenders, so for us, the possibilities are limitless,” he added.
The landmark legislation strengthens the legal framework of the Nigerian capital market, enhances investor protection, and introduces critical reforms aimed at promoting market integrity, transparency, and sustainable growth.
The enactment of the ISA 2025 reaffirms the authority of the SEC as the apex regulatory body of the Nigerian capital market. It empowers the Commission to regulate the market to ensure capital formation, protect investors, maintain a fair, efficient, and transparent market, and reduce systemic risks.
Additionally, the Act introduces transformative provisions designed to align Nigeria’s market operations with international best practices.
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