SEC, EFCC, and police team up to combat ponzi schemes

SEC reiterated its dedication to collaborating with law enforcement authorities to dismantle ponzi scheme operators. John Achile, SEC divisional head of legal and enforcement, addressed the commission’s Journalists’ Academy 2025 event in Lagos, focusing on ‘The ISA 2025 and The Future of Nigeria’s Capital Market: Innovation, Protection, and Growth.’

Achile emphasized that the commission will enhance its strategies to detect and prosecute promoters of ponzi schemes as per the Investments and Securities Act (ISA) 2025. To achieve this goal, SEC will liaise with the Economic and Financial Crimes Commission (EFCC), the Nigerian Police Force (NPF), and the office of the attorney general of the federation to clamp down on ponzi scheme operators.

He pointed out that SEC will not only freeze accounts and seal the offices of perpetrators but also highlighted the common practices of ponzi scheme operators. These operators typically use new investors’ funds to pay existing ones and provide false or incomplete documentation. Ponzi schemes often entice victims with high returns, minimal risks, and consistent profits during economic downturns. These fraudulent schemes are not registered with regulators and involve anonymous promoters.

Achile urged potential investors to verify the legitimacy of the business with the relevant regulatory authorities before investing. He cautioned Nigerians against falling for “get-rich-quick” schemes and advised them to exercise caution.

The SEC legal head outlined that ponzi schemes can take various forms, such as investment in agriculture or processing, digital currencies like Bitcoin, and precious metals like gold coins. These schemes not only result in financial losses for victims but also erode market confidence and contribute to socio-economic challenges.

In a previous warning issued on September 28, the commission alerted Nigerians about scams employing artificial intelligence (AI) to target investors. These scams falsely promise guaranteed profits and often misuse celebrity endorsements to lure unsuspecting individuals.

As SEC continues its efforts to combat fraudulent investment practices, the collaboration with EFCC, NPF, and other enforcement agencies signifies a united front against ponzi scheme operators. By cracking down on these fraudulent activities, SEC aims to safeguard investors, promote financial stability, and foster a secure investment environment for all participants in Nigeria’s capital market.