The Nigerian Securities and Exchange Commission (SEC) is set to introduce an Unstructured Supplementary Service Data (USSD) code, a key initiative aimed at enhancing investor protection and curbing the proliferation of unregistered operators and Ponzi schemes within the nation’s capital market.
Emomotimi Agama, director-general of the SEC, announced that the new verification tool will be unveiled at the forthcoming Capital Market Committee Meeting scheduled for this quarter. The USSD code system will enable mobile phone users to verify the registration status of capital market operators without requiring an internet connection, making the service accessible to virtually all Nigerians with a mobile device.
“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 stated.
The commission is intensifying efforts to combat unregistered and prohibited schemes, viewing it as a national responsibility to educate the public and foster legitimate wealth creation channels. Agama noted that the essence of SEC’s regulation is wealth redistribution, achieved by sensitising individuals to make money through legitimate means such as public offerings, Collective Investment Schemes, and other structured, properly regulated products.
In a broader push for financial literacy, the SEC is collaborating with the Nigerian Educational Research and Development Council to integrate capital market education from an early age, alongside working with consultants to introduce financial education games. The commission is also partnering with other institutions and government agencies to enlighten Nigerians on making informed investment choices.
Agama stressed that mere registration with the Corporate Affairs Commission (CAC) does not qualify an entity to conduct investment activities. Such entities, he said, must obtain registration from 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,” he advised, pointing out that only SEC-registered stockbrokers, accountants, and solicitors, among others, are qualified to provide investment advice.
The recently signed Investment and Securities Act (ISA) 2025 specifically addresses Ponzi schemes, classifying them as ‘prohibited schemes’ and broadening the scope to include similar financial crimes.
The new legislation introduces stringent penalties for offenders. Those found guilty face initial fines of N20 million, potentially escalating to N1 billion, coupled with a 10-year prison sentence. “There is no law in Nigeria that has taken such strict sanctions on Ponzi schemes and its promoters,” Agama asserted. The ISA 2025 also grants the SEC powers to take action against influencers and celebrities involved in promoting these schemes.
The SEC Director-General reiterated previous warnings against engaging in Ponzi or unregistered investment schemes that promise guaranteed or exaggerated returns, emphasising that such schemes lack SEC registration and offer no legal investor protection. He urged investors to conduct thorough due diligence, verifying the registration status of any investment firm or product via the SEC website or official channels.
