All you need to know about Investment and Security Bill that seeks to jail promoters of Ponzi schemes.

On March 29, 2023, the Nigerian Senate passed the Investment and Security Bill, which empowers the Securities and Exchange Commission (SEC) to protect investors and proposes a minimum of 10 years imprisonment for promoters of Ponzi and investment schemes in Nigeria.

From Mavrodi Mundial Movement (MMM) to Twinkas, Givers Forum, Ultimate Cycler, MBA Forex and Capital, Brisk Capital, and Chinmark group, among many others, Nigeria has witnessed a significant rise in nefarious Ponzi schemes, some of which were promoted by Nigerian celebrities.

The bill, when passed into law, seeks a jail term of not less than 10 years for promoters of Ponzi/pyramid schemes.

Reacting to the passage of the bill, the Chief Executive Officer of Enterprise Stockbrokers, Rotimi Fakayejo, said that both those who get involved in Ponzi schemes and their promoters should be punished.

“The person who goes into it should get a small punishment, and the person that starts the scheme should get a huge penalty. For anything, you are supposed to make findings,” Fakayejo said.

On March 11, 2021, a notable pop artiste, Rema, tweeted a photo of naira notes to endorse Brisk Capital Ltd.

“Hustle Thursday. ROI from my investment with @BriskCapitalLTD just came in, nice one my gees,” he wrote in a tweet that was reshared over 1000 times and got more than 11,000 likes before it was deleted a few weeks after Brisk Capital crashed.

It is believed that Rema’s tweet led many Nigerians to invest in Brisk, and barely a month later, the scheme crashed.

Aside from celebrities, Ponzi schemes are often promoted by friends and families who usually claim to have benefited from such schemes.

According to a report by Norrenberger Financial Investments, Nigerians have lost over ₦300 billion to Ponzi schemes in five years, as of 2022.

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In 2021, Earnest Ajadu, an Investment Banker and Head of Wealth Management at Afrinvest Ltd, a financial advisory firm based in Lagos, told Neusroom that poverty and greed push people into such schemes, which makes victims of such schemes to be mostly young and struggling Nigerians who are looking for ways to improve their financial situation.

Also, the bill, if assented by the President and passed into law, will repeal the Investments and Securities Act of 2007, and would empower SEC to collaborate with other regulatory bodies in the financial sector to manage, mitigate systemic risks, and effectively regulate the Nigerian capital market.

Babangida Ibrahim, the Chairman of the House Committee on Capital Markets and Institutions, speaking on the Bill at the time the House of Representatives passed it, said that the bill can transform Nigeria’s capital market.

“The bill seeks to repeal the existing Investments and Securities Act 2007 and to establish a new market infrastructure and wide-ranging system of regulation of investments and securities businesses in Nigeria, especially in the areas of derivatives, systematic risk management, financial market infrastructure, and Ponzi scheme and platforms.”