Nigeria's SEC Bans Investment Apps, Declares Them Illegal

On Thursday, the Securities Exchange Commission (SEC) released a statement warning investment platforms against trading unregistered foreign stocks.

The statement reads:

"The Securities and Exchange Commission (the Commission) has been notified to the existence of several online investment and trading platforms that purport to provide direct access to securities of foreign companies listed on securities exchanges registered in other jurisdictions to the investing public in the Federal Republic of Nigeria. These platforms also claim to be working in collaboration with Commission-registered Capital Market Operators (CMOs)."

The Commission further went on, " By the provisions of Sections 67-70 of the Investments and Securities Act (ISA), 2007 and Rules 414 & 415 of the SEC Rules and Regulations, only foreign securities listed on any Exchange registered in Nigeria may be issued, sold or offered for sale or subscription to the Nigerian public. Accordingly, CMOs who work in concert with the referenced online platforms are hereby notified of the Commission’s position and advised to desist henceforth."

What this means is that online investing apps operating in Nigeria such as RiseVest, Bamboo, Trove are illegal henceforth. This is bad news for the growing fintech space in Nigeria, and young people in the country in general, as these startups have worked really hard to improve the financial literacy of young Nigerians by making investing easy. Anyone with any of these apps can practically invest in the local stock market, and other foreign markets with their card and in naira.

Nigerians can buy shares of big global corporations like Tesla, Google, Microsoft, Facebook, etc. The platforms also offer bonds and other securities.

This isn't the first time the Nigerian government is trying to suffocate fintech startups, in February, the Central Bank of Nigeria released a circular banning cryptocurrency trading in the country, and ordering banks to close all accounts found to be involved in crypto transactions.

On the 19th of December 2020, the SEC banned Chaka, another investment app from operating in Nigeria. According to the statement, the SEC claimed Chaka had been operating "outside the regulatory purview of the Commission and without requisite registration, as stipulated by the Investment and Securities Act 2007.” 

The CEOs of the startups have come out to reassure their users. Richard Bassey, the CEO of Bamboo, assures all users that their assets are accessible to them at any time and safe. He also says the company is having talks with their SEC in order to ensure that the interests of users are fully protected.

The CEO of Chaka, Tosin Osibodu, gave a similar statement, assuring all users that the company has taken steps to register with the exchange commission.

Eke Urum, the CEO of RiseVest, also tweeted that registration with the SEC is being sorted.