Ponzi Scheme Operators to Get 10years Jail Term as Senate Passes SEC’s Repeal Bill

By Oluwakemi Kindness

The Director General, Securities and Exchange Commission SEC, Dr. Emomotimi Agama, says the bill repealing the commission’s act stipulates harsher penalties on Ponzi scheme operators, mandating a minimum fine of N20 million or up to 10 years in prison, or both.

Dr. Agama who spoke on the sidelines of the passage of the bill in the senate, explained that the bill explicitly prohibits Ponzi and pyramid schemes, fortifying protections for investors against illegal fund managers.

He added that it aims to shield Nigerian investors from fraudulent schemes and enhance the capital market’s global competitiveness.

The Senate in a major boost to the operations of the Securities and Exchange Commission SEC and the Nigerian capital market, passed the Investments and Securities Bill 2024 at Wednesday’s plenary session.

During the consideration of the report on the Bill from the committee on Capital Market, Senate Chief Whip, Tahir Monguno stated that it will protect investors and eliminate fraudulent dealings in the capital market.

Speaking on the bill, Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso said the bill sought to repeal the Investments and Securities Act, of 2007 and enact the Investments and Securities Act, 2024 stating that the ISB is capable of transforming the capital market, encourage the influx of foreign investors as well as boost investors’ confidence, among others.

Izunaso said: “The Bill seeks to repeal the existing Investments and Securities Act 2007, and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria especially in the areas of derivatives, systematic risk management, financial market infrastructure and Ponzi scheme and platforms.

He said, “It was meant to establish the Securities and Exchange Commission as the apex regulatory authority for the Nigerian Capital Market. It will be a regulation of the Market to ensure capital formation, the protection of investors, maintenance of fair, efficient and transparent market, and reduction of systemic risk.”

Izunaso further said the main objective of the bill was to enact legislation that aligned with global dynamics as they relate to the regulation of capital market through the provision of an innovative regulatory framework.

“It will protect the integrity of the security market against all forms of market abuse and insider dealing. It will prevent unauthorised, illegal, unlawful, fraudulent and unfair trade practices, relating to securities and investments.”

He said that the overriding purpose of the proposed legislation was to strengthen the capacity of the Commission for the effective performance of its statutory mandate as well as reposition that vital sector of the economy for national economic transformation.

While announcing the passage of the Bill, President of the Senate, Godswill Akpabio said a lot of people would be happy to infuse funds into the capital market when they know a lot of the risk has been minimised.

He thereafter declared the bill passed.

Meanwhile according to the SEC boss, a notable amendment in the Bill would allow the Investor Protection Fund (IPF), established by securities exchanges, to cover investor losses linked to the deregistration of brokerage firms, extending beyond the current coverage of bankruptcy or negligence cases.

Agama also noted the need for updates to the existing ISB 2007 to reduce ambiguities and align Nigeria’s capital market regulations with international standards.

“This bill’s passage would be pivotal in setting Nigeria on the path to a world-class capital market,” he stated, underscoring the role of a robust capital market in economic diversification.

The ISB 2024 also introduces regulatory frameworks for Commodity Exchanges and Warehouse Receipts, essential steps for developing Nigeria’s commodities sector.

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