Investing can be very beneficial, but it also carries certain risks.
While the banking industry guarantees the repayment of money deposited with the Central Bank of Nigeria (CBN), investments in stocks, bonds, and other securities do not guarantee value retention.
The laws governing the Nigerian securities market are primarily based on a core principle: every investor, whether institutional or individual, has the right to obtain essential and relevant information about an investment before making a purchase.
The Nigerian Securities and Exchange Commission (SEC) mandates that public companies disclose vital financial information.
These disclosures provide the credible data investors need to accurately evaluate the price of a company’s shares. Timely, comprehensive, and accurate information is critical to making informed investment decisions.
As Nigeria’s financial watchdog, the SEC is tasked with protecting investors by promoting fairness and transparency in the financial markets. It ensures businesses comply with securities regulations. Over time, the SEC’s powers and responsibilities have expanded to manage the growing complexity of financial markets.
The SEC plays a key role in maintaining equity and efficiency in the capital market while safeguarding investor interests. It ensures that stock exchanges and investment advisors comply with local securities laws, enabling effective regulation of all market participants.
Recently, the SEC Nigeria issued warnings about promoting unregistered investment schemes. These include blockchain-based platforms, cryptocurrency ventures, and forex trading outfits that operate without SEC approval.
The commission emphasized a critical warning: “If it sounds too good to be true, it probably is.” Investors were urged to conduct thorough due diligence and verify the registration status of any investment entity on the SEC’s official website.
Nigeria’s new investment law explicitly identifies Ponzi schemes and empowers the SEC to impose a minimum fine of N20 billion and a prison sentence of up to 10 years on individuals or entities promoting such illegal schemes.
Dr. Emomotimi Agama, the SEC’s Director-General, announced that the Commission is working closely with the Economic and Financial Crimes Commission (EFCC), the Nigeria Police Force, and other relevant law enforcement agencies to ensure accountability and enforce regulations.
He also disclosed that the SEC has created special departments to monitor market activities for irregularities and conduct preliminary investigations into suspected fraudulent activities. “We have a monitoring department. We also conduct on-site inspections. The moment we detect anything suspicious, we act,” he stated.
The first step toward making successful investments is to assess your goals and determine the level of risk you are willing to take, either independently or with the help of a financial advisor.
While no investment is guaranteed, by gathering relevant information about saving and investing, developing a solid financial plan, and following through on your strategy, you can build financial security over time and enjoy the rewards of effective money management.
Securities such as stocks, bonds, and mutual funds come with inherent risks and should be approached with caution. Investors must be aware of the possibility of losing part or all of their capital.
Taking on more financial risk may increase the potential for higher returns and long-term growth, but it also increases the possibility of greater losses.
Taking on more financial risk may increase the potential for higher returns and long-term growth, but it also increases the possibility of greater losses.