SEC To Launch USSD Code To Combat Ponzi Schemes.
The Securities and Exchange Commission (SEC) in Nigeria has unveiled plans to introduce a new Unstructured Supplementary Service Data (USSD) code system aimed at protecting investors from the growing threat of Ponzi schemes and unregistered investment operators. The initiative, set to be launched at the upcoming Capital Market Committee meeting this quarter, will allow Nigerians to verify the legitimacy of capital market operators using their mobile phones, even without an internet connection.
Dr. Emomotimi Agama, the SEC’s Director-General, announced the development in Abuja, emphasising its significance in empowering the public to make informed investment decisions. “We are introducing a code system that will allow mobile phone users to verify a capital market operator using USSD codes,” Dr. Agama explained. “If anyone approaches you claiming to be an operator, you can instantly check their registration status.” This move is designed to curb the proliferation of fraudulent schemes that have caused significant financial losses across Nigeria, with estimates suggesting over ₦911.45 billion has been lost to Ponzi schemes in the past 23 years.
The initiative comes alongside the newly signed Investments and Securities Act (ISA) 2025, which introduces stringent penalties for those involved in fraudulent investment schemes. Under the new law, offenders face fines starting at ₦20 million, potentially rising to ₦1 billion, and imprisonment for up to 10 years. Dr. Agama highlighted that the Act also grants the SEC authority to prosecute influencers and celebrities who promote unregistered schemes, addressing a key avenue through which fraudsters attract unsuspecting investors. “There is no law in Nigeria that has taken such strict sanctions against Ponzi schemes and their promoters,” he stated, crediting President Bola Tinubu for swiftly signing the Act into law.
The SEC is also intensifying its public education efforts to raise awareness about the dangers of unregistered investment platforms. Dr. Agama noted that the Commission is collaborating with the Nigerian Educational Research and Development Council to integrate financial literacy into school curriculums and is working with consultants to develop financial education games. Recent outreach programmes, such as those conducted at the Dei-Dei Building Materials Market in Abuja, have seen SEC officials distribute multilingual flyers and engage directly with traders to highlight the risks of Ponzi schemes. “A well-informed investor is a protected investor,” said Frana Chukwuogor, the SEC’s Executive Commissioner for Legal and Enforcement.
The Commission has urged Nigerians to exercise due diligence before investing, advising them to verify the registration status of any firm or product through the SEC’s website or official channels. The USSD code system is expected to make this process more accessible, particularly for those in areas with limited internet access. As the SEC continues its crackdown on fraudulent schemes, including a current investigation into 77 unregistered investment platforms, it remains committed to fostering a transparent and trustworthy capital market in Nigeria.