Nigeria’s SEC Prepares USSD Tool to Tackle Ponzi Crisis

Nigeria’s Securities and Exchange Commission (SEC) is rolling out a USSD-based verification tool that could reshape how investors protect their money. The initiative, aimed at stopping the spread of Ponzi schemes, will allow everyday Nigerians to check if a capital market operator is registered with the SEC—without needing internet access.

The USSD code will be unveiled at the upcoming Capital Market Committee (CMC) meeting this quarter. The commission believes the tool will close a major gap in investor protection by helping users confirm if they’re dealing with authorised firms before handing over their funds.

“If anyone comes to you claiming what they are not, all you need to do is check with the code,” said Dr. Emomotimi Agama, Director-General of the SEC. He noted that many Nigerians are often misled because they assume registration with the Corporate Affairs Commission (CAC) equals investment authorisation. It doesn’t. Only firms registered with the SEC can legally offer investment services in Nigeria.

SEC: Fighting Fraud with Simpler Tech and Stricter Laws

The tool is especially targeted at people using basic mobile phones, many of whom live in underserved or rural communities. These are often the most vulnerable to Ponzi-style schemes that promise high returns but leave many in financial ruin.

The SEC is doubling down on this effort by embedding capital market education in school curricula. In partnership with the Nigerian Educational Research and Development Council, the Commission is also planning interactive financial games for young Nigerians.

Agama stressed the need for public vigilance, especially with social media influencers pushing questionable financial products. “There is no legal protection for investors in unregistered schemes,” he warned.

Under the Investment and Securities Act (ISA) 2025, the SEC now has the legal power to sanction not just the promoters of Ponzi schemes but also celebrities who advertise them. Penalties range from ₦20 million to ₦1 billion, with possible prison terms of up to 10 years.

As financial scams become more sophisticated, Nigeria’s capital market regulator is urging citizens to be sceptical of investment opportunities that sound too good to be true. “Ask the right questions. Confirm registration with the SEC first,” Agama advised.

The Commission continues to encourage investments through regulated platforms like Collective Investment Schemes and public offers, which offer better protection and transparency.