By Chukwuma Umeorah
Although experts hail the the Investments and Securities Act (ISA) 2025 as it promises to transform Nigeria’s capital market, its success hinges on overcoming a significant hurdle, the sluggishness of the nation’s judicial system, which threatens to stall its full implementation and enforcement.
This concern was at the forefront of discussions during a recent forum hosted by the Capital Market Correspondents Association of Nigeria (CAMCAN), where the Head of the Enforcement Department at the Securities and Exchange Commission (SEC), Sa’ad Abdusalam, decried how systemic delays in the judiciary continue to undermine timely enforcement of securities laws and frustrate the Commission’s efforts to curb fraudulent investment schemes.
According to Abdusalam, the commission was constantly improving its existing frameworks including expanding its enforcement and legal team, but noted that, even when strong evidence is available, actions are hampered by the legal requirement for court approval, which often takes weeks or even months. “The legal environment in Nigeria is a very big challenge,” Abdusalam said. “Whatever you do, you have to go to the court. You have to obtain a court order. Sometimes you want to take an action urgently, but you cannot get the order until the next two or three weeks. That is where we are having problems.”
The practical consequences of this bottleneck are severe. From high-profile ponzi schemes such as the recent CBEX, MMM Nigeria and MBA Forex, to fraudulent entities like Famzhi Interbiz and Q-Net linked scam, judicial delays have repeatedly allowed criminal actors to evade timely regulatory action and defraud unsuspecting investors.
In the case of Famzhi Interbiz Limited, detected by the SEC in 2017, more than 15,000 Nigerians were defrauded of approximately N2 billion. Regulatory action was initiated, but it took until 2019 to secure a court-ordered asset freeze of N1.12 billion. The scheme’s promoter, Mariam Suleiman, was only arraigned in December 2021 and not convicted until June 2024; seven years after the fraud was first identified.
Abdusalam added that the recovered money would not be returned to victims, as the law requires such funds to be transferred to the federal government.
Similarly, the MMM Nigeria collapse in 2016, which wiped out several billions in savings, saw no major prosecutions due to the scheme’s decentralized structure and delays in securing court orders. Despite early warnings by the SEC, the scheme thrived unchecked for nearly a year. The MBA Forex case followed a similar pattern. The scheme, which defrauded investors of over N213 billion was uncovered in 2020. Till date, there are no verified reports of arrests or prosecution of its promoter, Maxwell Odum.
More recently, the Q-Net fraud case, involving over N1.4 billion, the Economic and Financial Crimes Commission (EFCC) arrested 28 individuals allegedly involved in Ponzi schemes, claiming they operated from a three-bedroom apartment in Al-Bishiri Estate and were linked to QNET, a globally recognized lifestyle and wellness direct-selling company.
QNET, however has categorically denied any association with these individuals or their illicit activities. Biram Fall, Regional General Manager for Sub-Saharan Africa said that while the EFCC reported recovering QNET application forms and documents during the operation, “these items were clearly misused by unauthorized parties exploiting our brand. These malicious acts not only damage our reputation but also harm unsuspecting individuals by eroding their trust and finances.”
These cases, among others, create the impression that regulatory authorities are falling short in tackling Ponzi-related crimes. While some stakeholders have pointed fingers at the SEC for these lapses, Abdusalam clarified that the persistent bottlenecks stem largely from the country’s sluggish judicial process. According to him, despite the Commission’s efforts to enhance its enforcement framework, meaningful action is often stalled by the legal requirement for court approvals delays that ultimately undermine investor protection and erode confidence in the system.
“We had a case where we wanted to obtain an order, the judge declined. What do we do? We can’t take an action without that legal backing.”
A 2020 study by the Independent Corrupt Practices Commission (ICPC) revealed that civil cases in Nigeria take an average of 85 weeks to resolve, far longer than in more efficient jurisdictions like the United States. Even with the existence of the Investment and Securities Tribunal (IST), legal proceedings related to investment disputes have yet to see significant improvements in speed or efficiency.
Some have also criticised what they saw as slow and reactive enforcement by SEC. Speaking to the case of PWAN Max and Silverkuun which were recent flagged as illegal/Ponzi operators, one participant said, “I expect that by now, the SEC should be in their offices arresting the people involved not until they dissappear with people’s money.” Others questioned whether the SEC was reaching the public early enough with warnings about these schemes.
The role of victims of ponzi schemes was also discussed. Although some stakeholders have called for some level of punishment for those who invest in these schemes. Abdusalam while noting that they are often driven by greed, clarified that “The law did not say a victim will be punished. The victim has already been punished by losing his money.” Adding that the current law does not allow recovered funds to be paid back to investors, which increases the losses they suffer.
Another challenge is the legal interpretation of key terms in the ISA 2025. While the law states that promoters of ponzi could face a 10 year jail term or N20 million fine (or both), Abdusalam said the SEC sometimes needs to wait for legal advice on how to proceed, particularly when it comes to identifying who qualifies as a “promoter” of a scheme. “We ask the lawyers to look at this law and tell us the extent we can go,” he said. “Whether promoter means someone who set up the company or someone advertising the product, it depends on legal interpretation.”
To address these challenges, the SEC is planning to bring back its judges’ training programme. Abdusalam said this was an earlier initiative aimed at helping judicial officers understand capital market issues and why prompt court orders are necessary in financial crime cases. “They are now talking to the National Judicial Council to bring it back,” he added.
Other efforts include working with the National Orientation Agency (NOA) and the National Broadcasting Commission (NBC) to improve public awareness and prevent fraud before it happens. “This current management has opened up a channel of discussion with NOA,” he said, noting that materials developed by the SEC will be sent through NOA’s offices nationwide.
Participants also raised concerns about the misuse of the Special Control Unit against Money Laundering (SCUML) certificate, which is meant for anti-money laundering purposes but is often displayed by illegal firms to appear legitimate. Abdusalam suggested an alternative approach, “Instead of giving people certificates that they will display, maybe the EFCC could issue them with a unique number for verification ; something that cannot be misused.”
Although key stakeholders have expressed confidence in the ISA 2025 and the positive impacts expected to come along with it, they suggest that Nigeria must enact and efficiently implement structural reforms to fast-track market-related cases, else, the ISA 2025 may not yield desirable result in combating ponzi/illegal schemes and strengthening investors confidence in Nigeria’s capital market.