The Securities and Exchange Commission (SEC) has issued a strong warning to promoters and operators of Ponzi schemes in Nigeria, stating that they risk severe penalties, including fines of up to N20 million or imprisonment for up to 10 years, or both, under the newly enacted Investments and Securities Act (ISA) of 2025. SEC Director-General, Dr. Emomotimi Agama, explained that the new law is designed to enhance Nigeria’s capital market regulations, protect investors, and ensure greater market transparency and integrity. Under the previous legal framework, the SEC lacked the power to prosecute Ponzi scheme operators, making it difficult to hold them accountable.
The new law now provides the SEC with the authority to impose significant sanctions on Ponzi scheme operators, including a minimum fine of N10 million. Dr. Agama emphasized that this fine is just a part of the overall penalty, which can also include the recovery of illicit gains made from the schemes through a process known as “disgorgement.” The law aims to deter would-be offenders and reduce the prevalence of Ponzi schemes, ensuring that perpetrators face substantial financial and legal consequences.
In addition to financial penalties, the ISA also grants the SEC the power to monitor communications, including phone conversations, to aid in the prosecution of Ponzi scheme operators. This expanded authority will allow the SEC to track and gather crucial evidence more effectively, making it easier to enforce legal action against those who attempt to defraud Nigerians. Dr. Agama highlighted the importance of these provisions in preventing further exploitation of vulnerable investors and enhancing the integrity of Nigeria’s financial system.
Dr. Agama also stressed that the primary goal of the ISA is to protect investors and maintain the trust and stability of Nigeria’s capital markets. With these new powers, the SEC is now better equipped to tackle fraudulent schemes and safeguard the interests of the Nigerian public, ensuring that market operators face stringent accountability measures. The law represents a significant step forward in regulating Nigeria’s financial landscape and preventing future Ponzi schemes from causing harm to unsuspecting investors.