•Proposed law prescribes 10-year jail term for ponzi schemes promoters
Juliet Akoje in Abuja
The Securities and Exchange Commission (SEC), the Chartered Institute of Stockbrokers and other stakeholders in the Nigerian capital market have backed a bill to prohibit Ponzi and pyramid schemes as well as other illegal investment platforms in Nigeria.
The key players made their support known at the public hearing on two bills organised by the House of Representatives committee on Capital Market and Institutions in Abuja, yesterday.
The bills were: “A bill for an act to repeal the investment and security 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 investors, maintain fair, efficient and transparent market and reduction of systematic risk and for related matters” and, “A bill for an act to repeal the chartered Institute of stockbrokers, CAP. C 9 Law of the Federation of Nigeria 2004 and provide for establishment of chartered institute of securities and investments and related matters.”
The stakeholders supported the proposed legislation for a provision that the investor protection fund set up by SEC would compensate investors who suffer pecuniary losses arising from the revocation or cancellation of the registration of a dealing member firm.
They expressed excitement over the provision in the bill prohibiting Ponzi, pyramid schemes as well as other illegal investment schemes and prescription of 10 years jail term for promoters of such schemes.
The Director General, SEC, Lamido Yuguda during his presentation said Nigeria needs and deserves an internationally competitive and well-functioning capital market to facilitate the on-going economic diversification and passage ad well as enactment of the investments and securities bill 2022 will be a pivotal step in that direction.
“This bill contains an entirely new part which provides for the regulation of Commodity Exchanges and Warehouse Receipts. These provisions are essential to allow for the development of the entire gamut of the Commodities ecosystem.
“The bill contains provisions which address the existing restrictions in respect of raising of funds from the capital market by sub-nationals to allow for greater flexibility in this regard.”
He further stated that some provisions in the ISA 2007 pertaining to the Composition of the Tribunal, functions of the Minister, Vacancy, constitution of the tribunal, qualification and appointment of the Chief Registrar as well as the jurisdiction of the Tribunal had been amended in the bill to enhance the ability of the tribunal to optimally discharge its mandate.
“It is a well-known fact that efficient capital markets are indispensable to the functioning of a modern economy. No economy can achieve any meaningful advancement without the important role capital markets play in supplying medium to long term finance,” he added.
Also speaking, the President of the Chartered Institute of Stockbrokers, Olawale Adeosun said, “in view of our various engagements with SEC, with respect to this bill, the Chartered Institute of Stockbrokers hereby expresses its utmost confidence in the National Assembly and this Committee to do utmost to facilitate the expeditious passage of the bill.”
Representatives of the NGX Group, Issuing Houses of Nigeria, Association of Security Dealers amongst others in their various presentations supported the proposed legislation.
The speaker of the House of representatives, Hon. Femi Gbajabiamila while declaring the hearing open said the legislature would not allow deficiencies in the capital market that cause investors to worry about the safety of their investments.
Gbajabiamila who was represented by the Deputy House leader, Hon. Peter Akpatason, said capital markets provide access to funding for new and existing businesses to innovate, expand, adapt to market changes and thrive.
“The capital markets also allow small and large-scale investors to contribute to the growth of enterprises and, by so doing, increase the values of their assets and create wealth.
“Therefore, it is abundantly evident that the proper and efficient operation of the capital market is essential to sustainable national economic growth,” he added.
The Chairman of the Committee, Babangida Ibrahim in his remarks said the House and the panel were determined to ensure SEC delivers on its core mandates.
