Securities and Exchange Commission (SEC) has proposed a bill it said will ensure that illegal fund managers are not allowed to fleece unsuspecting Nigerians of their hard-earned funds.

The bill proposes that promoters and operators of any entity engaged in a prohibited scheme are liable upon conviction to a penalty of not less than N20,000,000 or imprisonment for a term of 10 years, or both.

In simple term, it is an express prohibition of Ponzi/Pyramid schemes and other illegal investment schemes.

A Ponzi scheme is an investment scam that pays early investors with money taken from later investors to create an illusion of big profits

These and other provisions are contained in the Investments and Securities Bill (ISB) 2024, currently before the National Assembly.

The Bill proposes that promoters and operators of any entity engaged in a prohibited scheme commit an offense and are liable upon conviction to a penalty of not less than N20,000,000 or imprisonment for a term of 10 years, or both.

In his opening remarks at the public hearing held in Abuja, Senator Godswill Akpabio, president of the Senate, described the Investment and Securities Bill 2024 as more than just a legislative document but as a beacon of hope for the nation’s economic landscape.

Represented by Senator Binos Yaroe, Akpabio stated that by repealing the Investment and Securities Act of 2007, Nigeria is taking a bold step toward modernizing its financial markets, fostering transparency, and enhancing investor confidence.

He added that the Bill is designed to create a more robust and equitable environment for investment, ensuring that markets can thrive in an increasingly competitive global economy.

“As we delve into the discussions today, I urge you to embrace this opportunity with an open heart and a discerning mind.

“The importance of your contributions cannot be overstated. We are gathered here to listen, to learn, and to engage in honest dialogue.

“Your insights will help us craft a Bill that not only reflects the aspirations of our people but also addresses the intricate challenges we face in the investment landscape.

“Let us remember that the Senate remains fully committed to the Nigerian people.

“Our mandate is clear: to legislate for the betterment of our society, to create an enabling environment that fosters growth and innovation, and to safeguard the interests of every citizen. Your participation today is a vital part of this commitment.

“Together, we can ensure that the ISB 2024 is not just a piece of legislation but a transformative tool that propels Nigeria toward a future of economic resilience and prosperity.

“In conclusion, I implore you all to engage passionately in today’s discussions. Let us not shy away from challenging conversations; rather, let us embrace them.

“The journey toward a more vibrant investment landscape is one we must undertake together, and your voices are crucial in shaping the path forward.”

In his remarks, Senator Osita Izunaso, chairman of the Senate Committee on Capital Market, stated that the Nigerian capital market is the segment of the financial system in which long-term securities and financial assets are bought and sold, as it channels the wealth of savers and investors to those who can put it to long-term productive use, such as governments and corporate entities.

Izunaso emphasized that in view of Nigeria’s quest for urgent, rapid, and sustainable economic development, a well-developed capital market, which serves as the bedrock for long-term capital raising and industrial development, is imperative.

He noted that, given the crucial role of the Nigerian capital market in catalyzing national economic transformation, the market requires a strong legal framework that conforms to evolving societal and global realities.

“Distinguished ladies and gentlemen, you will all agree with me that fintech has caused many disruptions in the capital market in recent years, such that digital assets platforms are fast gaining ground as a critical aspect of the capital market ecosystem.

“Having operated the ISA 2007 for over 15 years, it has become apparent that the law requires a holistic review to strengthen its existing provisions, remove ambiguities, and introduce new provisions that would enhance the international competitiveness of the Nigerian capital market and reposition the market to more strategically fulfill its role as a critical segment of the Nigerian financial system.”

In his address, Dr. Emomotimi Agama, director-general, SEC, said the Bill also prescribes stringent jail terms and other stiff sanctions for the promoters of Ponzi schemes.

Agama noted that, having operated the ISA 2007 for several years, the Commission identified areas needing review to strengthen existing provisions, remove ambiguities, and introduce new provisions that would enhance the international competitiveness of the Nigerian capital market and reposition it to catalyze national economic transformation.

“A vital provision in the Bill is the new stipulation that the Investor Protection Fund (IPF) set up by the Securities Exchanges would compensate investors who suffer pecuniary losses arising from the revocation or cancellation of the registration of a dealing member firm.

“In the extant law, compensation from the IPF is limited to instances of ‘bankruptcy,’ ‘insolvency,’ or other acts of ‘negligence’ by a dealing member firm.

“This Bill also contains an entirely new part that provides for the regulation of commodity exchanges and warehouse receipts.

“These provisions are essential to allow for the development of the entire gamut of the commodities ecosystem.”

The SEC DG added that world-class capital markets are indispensable to the functioning of a modern economy, as no economy can achieve meaningful advancement without the crucial role capital markets play in supplying medium- to long-term finance.

“There is no doubt that Nigeria needs and deserves a world-class capital market to facilitate ongoing economic diversification.

“The passage and enactment of the Investments and Securities Bill 2023 will be a pivotal step in this direction,” he added.