The Nigeria National Assembly has passed the Investment and Securities Bill, a bill that proposes a specific prison term for Ponzi scheme promoters in the country.
The Investment and Securities Service Bill (ISB) 2023 has passed the final stage in the National Assembly as the Senate passed it on March 29.
The bill is expected to help the functioning of the capital market and develop the ongoing economic diversification in the country.
Currently, the bill is only awaiting presidential approval to become law as it has passed through all required processes, through the lawmakers.
At the general meeting, the Senate President, Ahmad Lawan, stated that the bill is expected to protect investors, adequately regulate the market, reduce systemic risks as well tackle Ponzi schemes by providing stricter punishment for those operating them.
“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,” he said.
Speaking during the time the House of Representatives passed the bill in December, the Chairman of the House Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the ISB 2023 could greatly enhance the capital market, attract foreign investment and build the confidence of investors, and more benefits are anticipated.
He 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.”
Because of the great loss of billions of Naira thrown into Ponzi/Pyramid schemes, which has also weakened the confidence of investors to invest in legitimate business, the ISB 2023 is also designed to make the schemes illegal.
The passed bill prohibits Ponzi/pyramid schemes as well as other illegal investment schemes and proposes at least a 10-year jail term for violators.
Ponzi schemes aka Pyramid sales schemes is a type of investment network that promises investors high returns for small investment. Most of the investors, in the end, lose their money because by the time older investors are paid from the investment of newer investors, the money left to pay the latter ones who are due payment would have been reduced beyond release, making the network shut down and disband.
According to Nigeria’s Securities and Exchange Commission, three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement (MMM) crashed in 2016. As at 2022, report by Norrenberger Financial Investments scheme has it that Nigerians lost over N300bn in Ponzi schemes within a five-year period.
The promoters of Ovaioza Farm Produce Storage Business Ltd., Imu Yunusa and Goodness Omeiza, are facing prosecution for enticing members of the public to an unregistered collective investment scheme. They have been accused of conning their victims of up to N2bn.