10-year jail term for Ponzi scheme operators proposed by House of Reps

The House of Representatives has proposed a 10-year jail term for Ponzi scheme operators, in the country,

The bill was passed for the second reading to repeal the Investments and Securities Act (ISA) 2007 and enact the Investments and Securities Act to establish Securities and Exchange Commission (SEC).

The bill, which seeks to make SEC the apex regulatory authority for the Nigerian capital market, prescribes a 10-year jail term for Ponzi scheme operators, in the country, among others.

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The proposed legislation, which is sponsored by Babangida Ibrahim, also empowers SEC to shut down all illegal investment schemes.

on Thursday, January 20, during the plenary, Ibrahim, in his lead debate, said current trends in the capital market have made the review of the Investments and Securities Act, Act No. 29 of 2007, enacted 14 years ago, imperative.

He noted that the proposed legislation would make the Nigerian capital market conform with international best practices. According to him, the major essence of the bill is the introduction of new provisions to regulate the activities of financial market infrastructure, as well as netting and bankruptcy provisions to protect investors in derivatives contracts.

There are new provisions on the regulation of Financial Market Intermediaries (FMIs) such as Central Counter Parties (CCPs), Clearing Houses, Trade Depositories, etc.

The general law of insolvency would have no effect on market contracts or action taken under the rules of an exchange, FMI with respect to market contracts, or an action taken to transfer any collateral.

Furthermore, no entity, trade association can operate or hold itself out as a Self Regulatory Organization (SRO) unless recognized or registered as such by SEC. The responsibilities of SRO are also well spelled out, while a new provision has been introduced on the netting of financial contracts.” 

We are enhancing provisions relating to efficient regulation of investment schemes. Recently there is a lot of complaints by Nigerians to the extent the Federal Government itself put an embargo on some accounts of Ponzi schemes. So as of the time of signing the current account, the Ponzi scheme was not in existence in Nigeria. So we have to put some regulations to monitor them.”

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