admin
Promoters of Ponzi schemes now risk up to 10 years imprisonment following the passage of the Investments and Securities Amendment Bill (ISB) 2023 into law by the Senate.
The bill, which is expected to aid the functioning of the capital market and facilitate the ongoing economic diversification in the country, among others, had been passed by the House of Representatives in December 2022.
Among other provisions, the bill prohibits the operation of Ponzi/pyramid schemes and other illegal investment schemes while prescribing a jail term of not less than 10 years for promoters of such schemes.
Other areas the bill addresses are alternative trading systems, the inclusion of the National Pensions Commission (PenCom) as part of the Board of the Securities and Exchange Commission (SEC), deletion of the provisions on merger control in the current Act and amendment of the criteria of borrowing by sub-nationals and strengthening and enforcement powers of the Securities and Exchange Commission in line with the requirement of the International Organisation of Securities Commissions (IOSCO).”
While announcing the passage of the bill during plenary on Wednesday, Senate President, Ahmad Lawan, stated that it is expected to protect investors, adequately regulate the market to reduce systemic risks as well as provide for more stringent punishment for operators of Ponzi schemes.
Speaking on major innovations in the bill, Mr Lamido Yuguda, Director General, SEC, disclosed that it expands the categories of issuers as a key step towards the introduction of innovations and offerings such as crowd-funding as well as the facilitation of “commercial and investment business activities”, subject to the approval of the commission and other controls stipulated in the bill.
“The bill expands the definition of a Collective Investment Scheme to include schemes offered privately to qualified investors. Minor reviews on various Sections of the extant law have been carried to provide greater clarity.
“Importantly, the bill introduces an express prohibition of Ponzi/Pyramid Schemes and other illegal investment schemes. The bill also prescribes a jail term of not less than 10 years for promoters of such schemes.”
