SEC Unveils USSD Code to Combat Ponzi Schemes
By Patience Ikpeme
The Securities and Exchange Commission (SEC) is set to roll out an Unstructured Supplementary Service Data (USSD) code designed for the verification of capital market operators.
This new tool is part of the Commission’s broader strategy to combat unregistered operators and curb the pervasive activities of Ponzi schemes across Nigeria.
Dr. Emomotimi Agama, the Director General of the SEC, announced this initiative in Abuja at the weekend, stating that the USSD code would be formally unveiled at the next Capital Market Committee Meeting, scheduled for the current quarter. Dr. Agama explained, “We are introducing the code system that will allow mobile phone users to verify a capital market operator using USSD codes. They do not require internet connection to be able to do this, which means any Nigerians that has a mobile phone will be able to perform this function. If anyone comes to you claiming what they are not, all you need to do is check with the code to know the status of their registration. That will be launched at the next Capital Market Committee Meeting.”
Dr. Agama disclosed that the Commission is dedicating substantial resources to address the challenge posed by unregistered and prohibited operators and schemes. He described it as a national responsibility to educate the public, develop the market, and ensure people comprehend that wealth can be generated through legitimate avenues.
The SEC DG further clarified, “The essence of regulation for us at the SEC is wealth redistribution.” He detailed that this objective is pursued by “sensitizing people that they can actually make money through legitimate processes like public offerings, Collective Investment Schemes and other structured products that allow Nigerians to invest into areas that are properly regulated and monitored for them to be able to have a return that is commensurate with what they have put in.”
To foster financial literacy from an early age, the Commission is collaborating with the Nigerian Educational Research and Development Council to “infuse capital market education from the cradle” and is also working with consultants to introduce financial education games. Collaboration with other institutions and government agencies is ongoing to enlighten Nigerians on the necessity of making informed investment choices.
Dr. Agama stressed a crucial distinction, clarifying that “registration with the Corporate Affairs Commission does not qualify an entity to be an investment company or carry out investment activities.” He added that “such an entity can only be qualified to be an investment company if they explicitly receive the registration of the SEC.” He advised individuals dealing with money matters to “ask them the relevant questions on registration with the SEC,” noting that registered stockbrokers, accountants, and solicitors, among others, are available to provide necessary advice.
A pivotal development in the fight against illicit schemes is the recently signed ISA 2025, which specifically addresses Ponzi schemes, terming them “prohibited schemes.” This new legal framework extends its scope beyond traditional Ponzi schemes to encompass “all other such crimes that people commit.”
Dr. Agama drew attention to the speed with which the President assented to the Act, noting, “You can see the passion of Mr. President in swiftly signing the Act, he did it in record time within one week. That is because he is particular about the welfare of Nigerians.”
The new Act introduces stringent penalties for offenders. “In that Act, if anyone is caught, they are to pay N20 million in the first instance meaning it can go up to as much as N1 billion, then they are going to be in prison for 10 years,” Dr. Agama disclosed. He further observed, “There is no law in Nigeria that has taken such strict sanctions on Ponzi schemes and its promoters.”
A provision of the ISA 2025 grants the SEC new authority to address promotional activities. “We now have powers to deal with influencers and celebrities that bring these up in the air and promote these Ponzi scheme operators,” Dr. Agama revealed. He affirmed that “The SEC is leaving no stone unturned in ensuring that Nigerians have the right information to enable them make wise investment decisions.”
The SEC leadership continues to advise the public to refrain from participating in Ponzi or unregistered investment schemes that promise guaranteed or exaggerated returns, as these schemes are not registered with the SEC and offer no investor protection under the law.
Investors are encouraged to conduct due diligence and verify the registration status of any investment firm or product by visiting the SEC website or contacting the Commission directly through official channels.
The Commission says it remains committed to its mandate of protecting investors, ensuring fair practices, and maintaining confidence in Nigeria’s capital market.
