THE Securities and Exchange Commission (SEC) has blocked assets valued at about N2.35 billion belonging to ponzi schemes as the Commission vows to further confiscate illegal assets and prosecute operators of unapproved schemes.
Ponzi scheme refers to illegal phony savings and investment scheme often run by unapproved persons in violation of extant rules and guidelines. Ponzi scheme is also known as “wonder bank”.
SEC stated that it blocked four bank accounts and real estate properties linked to operators of ponzi schemes while the Commission also sealed premises of four operators.
The blocked assets included N1.12 billion in various bank accounts and real estate properties valued at N1.23 billion.
Acting Director-General, Securities and Exchange Commission (SEC), Ms Mary Uduk, who presented the Commission’s scorecard for last year and plan for 2020 in Lagos, said the Commission recorded significant successes in its efforts to protect the Nigerian public from unscrupulous persons.
She explained that 2019 saw an upsurge in the activities of ponzi schemes in Nigeria and the Commission had to step up its enforcement actions to safeguard the public and deter the illegal operators.
According to her, the Commission went after many of the promoters and directors of such schemes, securing a conviction last year while many others are presently being prosecuted.
“We will continue to combat ponzi schemes this year. We intend to continue leveraging on the Memoranda of Understanding that were signed between the Commission and key stakeholders like the Nigeria Financial Intelligence Unit (NFIU) and the Economic and Financial Crimes Commission (EFCC) to strengthen our ability to do this,” Uduk said.
On the other areas of enforcement and investor’s protection, Uduk outlined that the Commission received 167 complaints and resolved 102 complaints in 2019 with N100.11 million and 8,848 shares recovered for investors. SEC is also prosecuting eight capital market fraud cases while it generated N194.48 million from penalties during the period.
She said the focus of the Commission enforcement program in 2020 will continue to be the protection of investors with particular attention to retail and unsophisticated investors in the Nigerian capital market.
“The Commission will continue to adopt a zero-tolerance policy on unethical practices by in the capital market with a view to promoting a culture of compliance and enhanced reporting. We will adopt a more proactive inspection and market surveillance regime to nip unethical practices and misconduct in the bud. We shall be referring more cases of infractions for hearing before the SEC Administrative Proceedings Committee. Furthermore, we shall be referring more matters for criminal prosecution to the office of the Attorney – General of the Federation in line with the provisions of Section 304 of the Investments and Securities Act 2007,” Uduk said.
She said the Commission plans to introduce major rules in 2020 to regulate activities of retail online foreign exchange (forex) trading, crowdfunding, nominee companies and margin lending.
The proposed rules will seek to provide a framework for the regulation of retail online forex trading in the Nigerian capital market which has since 2005 to date remained unregulated.
Also, to foster economic development and deepen the market, a rule is being considered to provide a regulatory framework permitting private companies with the required structure and mechanism in place to raise capital from the public through crowdfunding.
Another proposed rule will enable the Commission to bring all nominee companies under proper regulation and make provision for registration requirements, ownership structure, code of conduct and other matters incidental thereto.
Also, the Commission will amend the margin lending rules to mitigate and tackle market abuse practices by dealers or member companies by restricting the excessive use of credit for purchasing or transacting in securities by dealers or member companies.
She expressed optimism that the Nigerian capital market will record positive performance in 2020 citing macroeconomic policies and activities by the Commission and other stakeholders.
“Going forward into 2020, we expect the equities segment to benefit from various government initiatives targeted at improving the country’s business environment as well as efforts to lower interest rate and increase liquidity through increase in loan to deposit ratio,” Uduk said.
She added that the debt segment of the capital market will equally benefit from increased sovereign bond issuances coming from the need to finance the high deficit of 2020 budget.
“Aided by the various Commission’s and market’s initiatives to further deepen the market, our outlook on the Nigeria’s capital market for 2020 is therefore generally positive,” Uduk said.
