The Director-General of the Securities and Exchange Commission (SEC), Mr. Emomotimi Agama, has announced that the newly signed Investment and Securities Act (ISA 2025) now grants the Commission the authority to prosecute Ponzi scheme promoters with a potential sentence of at least 10 years in prison.
This statement was made on Tuesday during an interview on Arise TV, where Agama detailed the provisions of the newly enacted law. The law, which was recently signed by President Bola Tinubu, aims to strengthen Nigeria’s financial regulatory framework.
Stronger Legal Backing for Prosecution
According to Agama, the SEC previously lacked the necessary legal backing to effectively prosecute Ponzi scheme operators, making it difficult to hold them accountable. However, with the enactment of the ISA 2025, promoters of such fraudulent schemes now face severe penalties, including long-term imprisonment.
“With the new law, they now face a 10-year jail term and beyond,” Agama stated.
N40 Million Penalty for Ponzi Scheme Operators
In addition to imprisonment, the law stipulates a N40 million penalty for those found operating Ponzi schemes. Agama clarified that this fine is part of the broader penalties that would be imposed, emphasizing that the law aims to not just penalize but also deter individuals from engaging in such illegal activities.
“So, N40 million is not the entire penalty or the entire money that will be charged or sanctioned to any suspecting or any accused capital market or non-capital market operator. It is just part of the penalties,” he explained.
Agama further noted that the law would also ensure the disgorgement of profits gained from fraudulent activities, meaning that any profits or gains made from defrauding Nigerians would be fully recovered.
“It’s not about the quantum of the fraud, it’s about sanctions that would deter people from even getting into it,” Agama added.
Expanded Powers for SEC
The ISA 2025 not only strengthens the SEC’s prosecutorial powers but also equips the Commission with tools to access phone conversations and other necessary communications to build cases against Ponzi scheme operators. Agama emphasized that these new capabilities would enable the SEC to target bad operators more effectively and protect investors.
He also noted that the new law would contribute to enhancing the SEC’s investor protection responsibilities, fostering a more secure and confident investment environment in Nigeria.
A Step Forward for Capital Market Reform
The ISA 2025 is a significant milestone in Nigeria’s capital market reform, repealing the previous Investment and Securities Act No. 29 of 2007. This new legislation not only expands the SEC’s powers but also aligns the country’s regulatory framework with international standards, particularly those of the International Organization of Securities Commissions (IOSCO).
The SEC hopes that these reforms will increase investor confidence in Nigeria’s capital markets, provide stronger safeguards against fraud, and contribute to the country’s overall economic stability.
Backstory
The enactment of ISA 2025 reinforces the SEC’s role as the apex regulator of Nigeria’s capital markets. The law is a key component of the government’s efforts to strengthen the legal framework governing investments and capital market activities in the country.
