Ponzi scheme promoters, sponsors now face of 10 years imprisonment or N40 million fine

The Nigerian Securities and Exchange Commission (SEC) has said that the fight against Ponzi schemes has gained a new edge following the newly signed Investment and Securities Act (ISA) 2025 by President Bola Tinubu. The law now empowers the commission to prosecute Ponzi scheme promoters with a sentencing of at least 10 years’ imprisonment.

The Director-General of the Commission, Mr. Emomotimi Agama, during a Tuesday interview on Arise TV, expressed that the SEC had no legal backing to prosecute Ponzi scheme operators and sponsors prior to the new ISA, which has posed a major challenge in bringing these perpetrators to justice.

With the newly signed law, operators of Ponzi schemes now face a minimum of 10-year jail term while they could also face a N40 million penalty according to the law.

Responding to concerns about whether the N40 million penalty is a sufficient measure to punish someone who has defrauded people of billions, Agama said that the penalty is not the entire fee that will be charged or sanctioned to such an offender. He added that the money is just part of the penalties and/or sanctions that will be meted against such persons. 

“One of the basic things around sanctions is that there will be disgorgement, and disgorgement means that we are going to make sure that every profit and every gain that has been achieved in the process of defrauding Nigerians will be gotten back.  It is not about the quantum of the fraud, it is about sanctions that would deter people from even getting into it,” the SEC DG said.  

See Also: Ponzi Scheme: National Assembly approves new Investment and Securities Act.

Agama also expressed that the aim of the ISA Act is to provide the SEC with the authority to sanction offenders, bring them to book, and ensure they are able to restitute victims as much as possible. The new law gives the commission a powered mandate to fight against bad operators and bring relief to Nigerians.

“(The ISA) would also allow the Commission to get the ‘bad guys’ out of the way and make sure that people are more confident and happier to invest in the Nigerian market, knowing fully well that the investor protection responsibility of the SEC has now been enhanced,” Agama added.

Aside from the ability to sanction penalties and imprisonment sentences, the new ISA also provides the SEC with the power to obtain all other conversations that are required to prosecute Ponzi scheme operators.

Further commitment to capital market and Ponzi scheme protection 

While announcing the ISA act before the President’s assent, the SEC reaffirmed its commitment to securing the capital market by ensuring that only fit and proper individuals operate in Nigeria’s capital market, vowing to clamp down on fraudulent activities and protect investors.

SEC explained that its primary mandate remains investor protection, stressing that 2025 will usher in a period of zero tolerance for non-compliance and that all market operators engaging in unethical practices would not be allowed to go unpunished. 

“It is important to state clearly that every investor in Nigeria is under the cover of the SEC as long as the person operates within the Nigerian capital market. And so the year 2025 is a year where we say that there is zero tolerance for any activity that does not fall within the laws of the Investments and Securities Act 2007,” SEC added.

Expressing its goal of eradicating Ponzi schemes, the commission said it wants to ensure that there is no hiding place for individuals or entities seeking to defraud investors in the Nigerian capital market while it continues to intensify its efforts to protect investors.

The DG also pointed out that the Act will provide stricter penalties and severe consequences for fraudulent and Ponzi schemes that have exploited innocent Nigerians and investors. He reinstated that perpetrators of such manipulations would face the wrath of the law.

“Ponzi schemes will no longer be an avenue for fraudsters to deceive investors. The penalties in the new ISA are stiff enough to deter such activities, and we are committed to implementing them fully,” he added.