Nigeria Imposes New Law and Jail Terms on Ponzi Schemes

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The Nigerian government has introduced stricter penalties for promoters and operators of prohibited investment schemes under the new Investments and Securities Act (ISA) 2025. Individuals found guilty of running Ponzi schemes will face a minimum fine of N20 million, a jail term of at least 10 years, or both.

According to the Securities and Exchange Commission (SEC), the new law aims to strengthen the legal framework governing the country’s capital market, enhance investor protection, and promote reforms that uphold market integrity, transparency, and long-term growth.

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SEC Director-General Emomotimi Agama emphasised that prior to the Act, the Commission lacked the authority to effectively prosecute Ponzi scheme operators. “Before the Act came into being, the Commission lacked the legal authority to prosecute Ponzi scheme operators effectively,” Agama explained.

Agama clarified that the N20 million fine is only part of the penalties, and additional sanctions, including financial restitution, will be applied to ensure perpetrators are held accountable. One critical provision of the Act is “disgorgement,” which requires convicted individuals to return illicit profits or gains acquired through fraudulent schemes

The objective, according to Agama, is not only to punish offenders but also to create deterrent measures that discourage fraudulent activities in the capital market. “The objective is not just to punish offenders but to create deterrent measures that discourage fraudulent activities in the capital market,” Agama stated.

The new law also grants the SEC expanded investigative powers, including access to telephone records and other communications necessary to prosecute Ponzi scheme operators. Agama acknowledged that many Nigerians have fallen victim to Ponzi schemes due to the lack of stringent sanctions.

“Protecting investors is a core responsibility of the SEC, and this law strengthens our ability to fulfill that duty. We now have greater authority to obtain phone records and other vital evidence to track down individuals defrauding Nigerians. This law provides us with limitless enforcement capabilities,” Agama stated

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