National Assembly Passes A Bill Criminalizing Ponzi Schemes
National Assembly Passes A Bill Criminalizing Ponzi Schemes

National Assembly Passes A Bill Criminalizing Ponzi Schemes

National Assembly Passes A Bill Criminalizing Ponzi Schemes

National Assembly has passed a bill criminalizing the operation of ponzi scheme in the country. The investment and Securities Bill 2023 passed on Wednesday, proposed stiff penalty for the promoters of ponzi/pyramid schemes in the country.

The penalty, include a minimum of ten year jail term for convicted operators of the schemes.

The Bill which had been passed by both the senate and house of reps, now awaits the assent of President Buhari to become a law.

Senate President, Ahmad Lawan, during the Wednesday plenary said the bill seeks to protect  investors and regulate the investments market.

These schemes, also known as pyramid sales schemes, are a money laundering system where investors are lured in with the promise of high returns on investment after a specified period.

The system runs in a somewhat cyclic fashion by paying old investors with deposits of new investors but usually becomes unsustainable when the backlog of old investors eligible for payments exceeds the investments coming into the system.

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According to Nigeria’s Securities and Exchange Commission, three million Nigerians lost N18bn when the popular Ponzi scheme, Mavrodi Mundial Movement aka MMM, crashed in 2016.

As of 2022, Nigerians have lost over N300bn in Ponzi schemes in five years, according to a report generated by the Norrenberger Financial Investments scheme.

Promoters of Ponzi schemes will now face a jail term of not less than 10 years, and the bill also prescribes asset forfeiture and a fine of 10-20% of the amount of money collected from victims.

The Chairman of the House Committee on Capital Markets and Institutions, Babangida Ibrahim, stated that the ISB 2023 was capable of transforming the capital market, attracting foreign investors, and boosting investors’ confidence, among others.

However, the National Chairman of the Progressives Shareholders Association of Nigeria, Boniface Okezie, expressed a divergent opinion on the Ponzi scheme prohibition.

Okezie claimed that Ponzi schemes have been embraced in other places and accused the National Assembly of copying foreign laws that may have little or no impact on the Nigerian scene.

He also doubted that President Muhammadu Buhari would sign the bill before the expiration of his tenure next month.

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