National Assembly Passes Bill To Jail Ponzi Scheme Operators For Up To 10 Years

An investment and Securities Bill, which includes provisions for possible jail sentences for those who promote Ponzi schemes in Nigeria has been passed by the National Assembly.

The Investment and Securities Service Bill 2023 finally scaled through the final hurdle of the National Assembly when the Senate passed it on March 29.

Expected to aid the functioning of the capital market and facilitate the ongoing economic diversification in the country, the bill had been passed by the House of Representatives in December. It is only awaiting presidential assent to become law.

The Senate President, Ahmad Lawan, at plenary stated that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks as well as provide for more stringent punishment for operators of Ponzi schemes.

He said, “The bill for an act to repeal the Investments and Securities Act 2007 Act No. 29 2007 and enact the Investments and Securities Bill 2023 to service the SEC as the apex regulatory authority for the Nigerian capital market as well as regulation of the market to ensure capital formation, to protect investors, maintain fair, efficient and transparent market and reduction of systemic risk and for related matters is hereby passed.”

Speaking as of the time the House of Representatives passed the bill, the Chairman of the House Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the ISB 2023 was capable of transforming the capital market, attracting foreign investors as well as boosting investors’ confidence, among others.

Ibrahim 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.”

One of the developments that the new bill brings is the prohibition of Ponzi/Pyramid schemes, which have led to the loss of billions of naira on the part of victims and also affected confidence in the investment climate in Nigeria.

The passed bill prohibits Ponzi/pyramid schemes as well as other illegal investment schemes and prescribes a jail term of not less than 10 years for promoters of such schemes.

Ponzi schemes, also known as pyramid sales schemes, where investors are lured in with the promise of high returns on investment after a specified period.