The Securities and Exchange Commission is set to introduce an Unstructured Supplementary Service Data (USSD) code for verification of capital market operators.
SEC said the move is part of its commitment to combat unregistered operators and stem the tide of Ponzi scheme activities in Nigeria,
Director general of SEC, Dr. Emomotimi Agama, who made this known, noted that the code would be unveiled at the next Capital Market Committee Meeting scheduled for this quarter.
According to Agama, “We are introducing the code system that will allow mobile phone users to verify a capital market operator using USSD codes. They do not require internet connection to be able to do this, which means any Nigerians that has a mobile phone will be able to perform this function.
If anyone comes to you claiming what they are not, all you need to do is check with the code to know the status of their registration. That will be launched at the next Capital Market Committee Meeting”.
Agama disclosed that the commission is putting all hands-on deck to deal with the malaise of unregistered and prohibited operators and schemes because it has a national responsibility to educate people, to develop the market and to get people to understand that wealth can be made legitimately via legitimate means.
“The essence of regulation for us at the SEC is wealth redistribution and how do we do that? We do that by sensitising people that they can actually make money through legitimate processes like public offerings, Collective Investment Schemes and other structured products that allow Nigerians to invest into areas that are properly regulated and monitored for them to be able to have a return that is commensurate with what they have put in.
“We are working with the Nigerian Educational Research and Development Council to be able to infuse capital market education from the cradle and also working with consultants to introduce games in financial education. It is something that we must all set out to do. We are also collaborating with other institutions and government agencies to ensure that we are able to enlighten Nigerians about the need to make the right choices and investments.
The SEC DG emphasised that registration with the Corporate Affairs Commission does not qualify an entity to be an investment company or carry out investment activities, adding that such an entity can only be qualified to be an investment company if they explicitly receive the registration of the SEC.
“The first thing you ask anyone that comes to speak to you on money matters, ask them the relevant questions on registration with the SEC. We have stockbrokers, registered accountants, registered solicitors etc all of whom are registered by the SEC to provide that advice that you need. We have agents who we call sponsored individuals that can provide this information to those that are interested. Investment inclusion is the end game.
Agama disclosed that the recently signed ISA 2025 was particular about Ponzi schemes as it was termed prohibited schemes, which means it goes beyond the normal Ponzi schemes to all other such crimes that people commit.
He said: “You can see the passion of Mr. President in swiftly signing the Act, he did it in record time within one week. That is because he is particular about the welfare of Nigerians. In that Act, if anyone is caught, they are to pay N20 million in the first instance meaning it can go up to as much as N1 billion, then they are going to be in prison for 10 years. There is no law in Nigeria that has taken such strict sanctions on Ponzi schemes and its promoters.
“We now have powers to deal with influencers and celebrities that bring these up in the air and promote these Ponzi scheme operators. The SEC is leaving no stone unturned in ensuring that Nigerians have the right information to enable them make wise investment decisions”.
The SEC boss therefore reiterated the Commission’s earlier warnings to the public to desist from engaging in Ponzi or unregistered investment schemes that promise guaranteed or exaggerated returns. These schemes are not registered with the SEC and do not offer investor protection under the law.
He encouraged investors to conduct due diligence and verify the registration status of any investment firm or product by visiting the SEC website or contacting the Commission directly through official channels adding that the Commission remains committed to its mandate of protecting investors, ensuring fair practices, and maintaining confidence in Nigeria’s capital market.
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