ISA 2025: Ponzi operators risk 10 year jail term, N20m fine

Orisemeke Benjamin

Promoters and operators of any entity engaged in a prohibited scheme commits an offence and is liable on conviction to a penalty of not less than N20 million or imprisonment to a term of 10 years or both.

This is one of the provisions of the newly signed Investments and Securities Act 2025.

The Director-General of the Securities and Exchange Commission (SEC), Dr. Emomotimi Agama who stated this during an interview in Abuja, said the goal of the new legislation is to strengthen the legal framework governing Nigeria’s capital market, better protect investors, and introduce reforms that will promote market integrity, transparency, and sustainable growth.

Agama stated that, previously, the SEC lacked the legal power to prosecute Ponzi scheme operators, which made it difficult to bring offenders to justice.

However, under the new law, those convicted of operating Ponzi schemes face a jail term of 10 years or more.

“With the new law, they now face a 10-year jail term and beyond,” he said.

He further explained that the Act stipulates a minimum fine of N20 million for anyone operating a Ponzi scheme in Nigeria.

“So, N20 million is not the entire penalty or the entire money that will be charged or sanctioned to any suspecting or any accused capital market or non-capital market operator. It is just part of the penalties and or the sanctions that will be meted against such persons,” Agama explained.

The SEC Director-General also said that sanctions will include “disgorgement,” meaning that any profits or gains obtained from defrauding Nigerians will be recovered adding “It is not about the quantum of the fraud, it is about sanctions that would deter people from even getting into it”.

Also, Agama said the new ISA has also provided the SEC with the power to be able to obtain and request telephone conversations and all other conversations that are required to Prosecute Ponzi operators.

“We recognize that a lot of Nigerians have fallen prey to these sponsor schemes and the reason why that is the case is because there were no sanctions. You know enough to deter them from doing this so what this Act has done is to introduce measures for Ponzi scheme operators and intending Ponzi scheme operators not to be able to do this again against the wish and will of Nigerians.

“Protecting the investors in Nigeria is a cardinal responsibility of the SEC and this law has provided the SEC with stronger powers to be able to do that. This law has also been able to provide the SEC the powers to be able to search phones and get phone records for people who are interested in dealing with Nigerians or interested in duping Nigerians. We are able to get these records and quickly provide enforcement actions for the people that are involved so for us it is limitless”, he added.

The landmark legislation strengthens the legal framework of the Nigerian capital market, enhances investor protection, and introduces critical reforms to promote market integrity, transparency, and sustainable growth.

The enactment of the ISA 2025 reaffirms the authority of the SEC as the apex regulatory authority of the Nigerian Capital Market as well as to regulate the market to ensure capital formation, the protection of investors, and maintenance of a fair, efficient and transparent market and reduction of systemic risks. The Act also introduces transformative provisions to further align Nigeria’s market operations with international best practice.