New Law Imposes N20m, 10 Years Jail Penalties for Ponzi Scheme Operators
By Patience Ikpeme
Individuals or entities involved in prohibited investment schemes now face severe penalties under the newly signed Investments and Securities Act 2025.
A conviction now carries a minimum fine of N20 million, a 10-year prison sentence, or both.
The Securities and Exchange Commission (SEC) Director-General, Dr. Emomotimi Agama, stated that the new legislation aims to strengthen the legal framework governing Nigeria’s capital market, protect investors, and promote market integrity, transparency, and sustainable growth.
Agama noted that previously, the SEC lacked the legal authority to prosecute Ponzi scheme operators, hindering effective enforcement.
The new law introduces a 10-year minimum jail term for those convicted of operating Ponzi schemes. “With the new law, they now face a 10-year jail term and beyond,” he said.
He explained that the Act stipulates a minimum fine of N20 million for operating a Ponzi scheme. “So, N20 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 and or the sanctions that will be meted against such persons,” Agama clarified.
The SEC Director-General added that sanctions will include “disgorgement,” meaning any profits or gains obtained from defrauding Nigerians will be recovered. “It is not about the quantum of the fraud, it is about sanctions that would deter people from even getting into it,” he said.
Agama also stated that the new ISA grants the SEC the power to obtain telephone and other communication records necessary to prosecute Ponzi operators.
“We recognize that a lot of Nigerians have fallen prey to these Ponzi schemes and the reason why that is the case is because there were no sanctions. You know enough to deter them from doing this so what this Act has done is to introduce measures for Ponzi scheme operators and intending Ponzi scheme operators not to be able to do this again against the wish and will of Nigerians.
“Protecting the investors in Nigeria is a cardinal responsibility of the SEC and this law has provided the SEC with stronger powers to be able to do that. This law has also been able to provide the SEC the powers to be able to search phones and get phone records for people who are interested in dealing with Nigerians or interested in duping Nigerians. We are able to get these records and quickly provide enforcement actions for the people that are involved so for us it is limitless,” he added.
The legislation strengthens the legal framework of the Nigerian capital market, enhances investor protection, and introduces reforms to promote market integrity, transparency, and sustainable growth.
The enactment of the ISA 2025 now solidifies the SEC’s authority as the apex regulatory body of the Nigerian Capital Market, enabling it to regulate the market to ensure capital formation, protect investors, maintain a fair and transparent market, and reduce systemic risks.
The Act also introduces provisions to align Nigeria’s market operations with international best practices.
