The Securities and Exchange Commission (SEC) has introduced stricter measures to combat Ponzi and pyramid schemes in Nigeria, with the proposed Investment and Securities Bill (ISB) 2024.
Currently under consideration by the National Assembly, the bill aims to strengthen the financial market by expressly prohibiting illegal investment schemes.
Under the ISB 2024, promoters and operators of Ponzi and other illegal schemes will face penalties, including fines of at least N20 million and jail terms of up to 10 years, or both, if convicted.
During the public hearing on the bill held Thursday in Abuja, Senate President Godswill Akpabio, represented by Senator Binos Yaroe, underscored the significance of the proposed legislation.
Akpabio described the bill as “a beacon of hope” for Nigeria’s economy, noting that it marks a crucial step towards modernizing financial markets, improving transparency, and enhancing investor confidence.
The ISB 2024 is set to replace the Investment and Securities Act of 2007, with a focus on creating a fair and competitive environment for investment and fostering market growth in the 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 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 conclusion, I implore you all to engage passionately in today’s discussions. Let us not shy away from challenging conversations rather, let us embrace them. The journey towards a more vibrant investment landscape is one we must undertake together, and your voices are crucial in shaping the path forward.”
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 in view of Nigeria’s quest for urgent, rapid and sustainable economic development, a well-developed capital market which 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 which is in conformity with ever evolving societal and global realities.
“Fintech has caused a lot disruptions in the capital market in recent years such that digital assets platforms are fast gaining ground as a critic aspect of the capital market ecosystem.
“Having operated the ISA 2007 over 15 years, it has, therefore, become apparent that the law requires holistic review in order 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, said the Bill also prescribes stringent jail terms and other stiff sanctions for the promoters of Ponzi schemes.
Agama noted that haven operated the ISA 2007 for a number of years, the Commission observed areas requiring review in order 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 (IPF) set up by the Securities Exchanges would compensate investors who sufer 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.”
The SEC DG added that without 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 on-going economic diversification.
“The passage and enactment of the Investments and Securities Bil 2023 will be a pivotal step ni this direction” he added.