The House of Representatives has passed a bill for the second reading, recommending a 10-year prison sentence for operators of Ponzi and pyramid schemes such as MMM.
It would be recalled that back in 2017, the Mavrodi Mundial Moneybox (MMM), the Russian-founded Ponzi scheme which was the rave of the moment at the time wrecked the lives of so many Nigerians after it crashed forcing investors to lose huge sums of money. Since then, there has been an emergence of several other Ponzi schemes that have left many Nigerians in tears after escaping with their investments.
The new bill
However, this new proposed law would provide more regulatory powers for the Securities and Exchange Commission to combat such schemes, as well as provide for easier access to securities and facilities for state and local governments.
The legislation is titled, ‘A Bill for an Act to Repeal the Investments and Securities Act, 2007 and Enact the Investments and Securities Bill to Establish Securities and Exchange Commission as the Apex Regulatory Authority for the Nigerian Capital Market as well as Regulation of the Market to Ensure Capital Formation, the Protection of the Market to Ensure Capital Formation, the Protection of Investors, Maintain Fair, Efficient and Transparent Market and Reduction of Systematic Risk; and for Related Matters.’
The bill also establishes the Securities and Exchange Commission (SEC) as the primary regulator of the Nigerian capital market. The bill will enable SEC to properly regulate the capital market, ensure capital formation, protect the market to ensure capital formation, protect investors, maintain a fair, efficient and transparent market and reduce systematic risks when passed into law.
What they are saying
The bill’s sponsor, Babangida Ibrahim, Chairman of the House Committee on Capital Markets, observed that the present law governing the Nigerian capital market, the Investments and Securities Act, Act No. 29 of 2007, was signed into law by late President Umar Musa Yar’adua in June 2007. Speaking during the debate, Ibrahim stated that the bill would give a jail term of not less than 10 years for promoters of Ponzi schemes.
“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. We are enhancing provisions relating to efficient regulation of investment schemes. Recently there are a lot of complaints by Nigerians to the extent the FG itself put some embargo on accounts on Ponzi schemes. 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 to monitor them.”
Ibrahim noted that current trends in capital markets regulation, about 15 years after, have made it necessary to make major improvements to the Act to align the Nigerian market with international standards. He said “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 (SEC) to perform their optimum functions.”