Legislature

SEC proposes Bill to jail Ponzi schemes promoters 10 years

The Securities and Exchange Commission (SEC) has proposed a bill to empower it to prosecute and jail promoters of Ponzi schemes for 10 years.

The Bill titled ‘A bill to repeal the Investment and Securities Act 2007 and to enact the Investments and Securities Act, 2021’ has passed the second reading on the floor of the House of Representatives.

Section 195 (1) of the Bill empowers SEC thus: “The Commission shall have the power to enter and seal up all prohibited schemes and shall obtain an Order of court to freeze and forfeit all assets of such schemes to the Federal Government of Nigeria. 

“(2)The cost and expenses incurred under subsection (1) above shall be a first charge from the funds and properties of the illegal scheme including assets of its owners, promoters and or managers, whether acquired legitimately or otherwise.

“(3) For the purposes of this Bill, “prohibited scheme” including those commonly known as a “Ponzi or Pyramid scheme” means: (a) Any investment scheme that pays existing contributors with funds collected from new contributors to the scheme promising high returns with little or no risk:

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“i) Whether or not the scheme limits the number of persons who may participate therein, either expressly or by the application of conditions affecting the eligibility of a person to enter into, or receive compensation under the scheme; or ii) Whether the scheme is operated at a physical address or through the internet or other electronic means.

“(b) Any scheme where participants attempt to make money by recruiting new participants usually where: (i)      the promoter promises a high return in a short period of time, and (ii)   no genuine product or service is actually sold; or (iii) the primary emphasis is on recruiting new participants

“(4) The promoter(s) and operator(s) of any entity engaged in a prohibited scheme commits an offence and is liable upon conviction to imprisonment for a term of ten (10) years or a fine of N5,000,000 or both”.

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