Bill Prescribing 10-Year Jail Term For Ponzi Scheme Promoters Passes Second Reading

The House of Representatives has prescribed a 10-year jail term for any person found promoting Ponzi or Pyramid schemes in the country.

The bill, sponsored by Hon. Babangida Ibrahim (APC, Katsina), passed a second reading on Thursday.

The lower legislative house believes that when this bill passes through the Senate and becomes law, it will arrest the growing rate of Ponzi investment programs currently designed to defraud Nigerians of their hard-earned money.

The bill is an update on the Investment and Securities Act, 2007 which gives the legal basis for the establishment of the Securities and Exchange Commission (SEC) as the highest regulatory body in the nation’s capital market.

Making a case for the bill, Ibrahim held that the bill, when it becomes law will protect Nigerians from swindlers in the name of investment outfits.

“The Bill prohibits Ponzi/Pyramid Schemes as well as other illegal investment schemes and prescribes a jail term of not less than 10 years for promoters of such schemes. The Commission would also be empowered to shut down such prohibited investment schemes," the lawmaker said.

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

“The current ACT regulating the capital market is the securities and investments act of 2007. It was signed by the late Umaru Musa  when he was the President. If you calculate from 2007 to date it’s about 15 years. The current reality in the capital market requires that those regulations be improved to enable the regulators to perform their optimum functions. That is why, we are repealing the ACT because some essential part of the ACT requires amendments and also there is a need to introduce some new sections to the ACT. The original ACT contains about 266 sections but the current one contains about 351 sections.”

The second reading, though not directly connected to the Chinmark Group Group situation which has caused considerable fear among the investing public recently, would give the authorities the legal backing to arrest any person involved in participating in a Ponzi or Pyramid scheme. 

In December, the Securities and Exchange Commission, Nigeria (SEC) had issued a warning about Chinmark Group and a related company FinAfrica Investment Limited as illegal entities which are unregistered with the regulator. SEC had warned the public against doing business with the organisation.