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National Assembly proposes jail terms for Ponzi scheme promoters

The National Assembly has passed the Investment and Securities Bill, which includes provisions for jail sentences for those who promote Ponzi schemes in the country.Information Guide Nigeria

Oluwakemi Abimbola examines the implications of the bill on investment when it is signed into law.

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According to PUNCH, 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.

The bill had been passed by the House of Representatives in December and is expected to aid the functioning of the capital market and facilitate the ongoing economic diversification in the country.

The Senate President, Ahmad Lawan 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 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.”NYSC Portal

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

Nigerians lost over N300bn in Ponzi schemes in five years, according to a report generated by the Norrenberger Financial Investments scheme.

According to Nigeria’s Securities and Exchange Commission, as of 2022, three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement aka MMM, crashed in 2016.

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Inaddition, the promoters of Ovaioza Farm Produce Storage Business Limited, a popular investment scheme are facing prosecution for luring members of the public to an unregistered collective investment scheme.

The promoters, Imu Yunusa and Goodness Omeiza have been accused of defrauding their victims up to N2bn.

Reacting to the introduction of the prohibition of Ponzi schemes, Chief Executive Officer of Enterprise Stockbrokers, Mr Rotimi Fakayejo, said, “I remember very well, this Ponzi scheme that got a lot of people in trouble, MMM. In the end, it is not just about people losing money. It is the disinterestedness in investing. First, they invested in the wrong window and ultimately, they will not invest again.

“Some foolishly and gullibly invested in it and some because of ignorance entered into it and others because of greed. Those who entered into it because of greed know what they were doing, they are just greedy. But the ones who get into it ignorantly, not knowing that such schemes are not authorised by the SEC are the ones who may never enter into any viable or regulated investment window again. Every economy needs investment, for money to be revolving through profitable channels.”JAMB Result

He further stated: “The person who goes into it should get a small punishment and the person that starts the scheme should get a huge penalty. For anything, you are supposed to make findings.”

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Idongesit Akpa-Ayang

Idongesit is a graduate of Communication Arts, University of Uyo. Currently working as a news reporter at InfoGuide Nigeria.

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