Renowned Professor of Capital Market and Director, Instituteof Capital Market Studies, Nasarawa State University, Uche Uwaleke, has applauded the passage of the Investment and SecurIties Act (ISA) 2025, describing it as robust and vital for the overall growth of the capital market in Nigeria.
Prof. Uwaleke spoke at the ISA 2025 Sensitization Workshop organized on Saturday by the Institute of Capital Market Studies (ICMS) in collaboration with Association of Capital Market Academics of Nigeria (ACMAN).
TheFact Daily reports that the ISA 2025 was signed into law by President Bola Tinubu in March 2025, replacing the ISA 2007, with the aim to enhance Nigeria’s capital market, align it with global standards, and boost investor confidence.
Speaking, Uwaleke said the ISA 2025 represents a significant step forward in modernizing Nigeria’s capital market framework, enhancing regulatory oversight, and providing robust investor protections.
“The Act significantly strengthens the Securities and Exchange Commission’s (SEC) authority, aligning it with international standards set by the International Organization of Securities Commissions (IOSCO).
“The new provisions expand the Commission’s surveillance capability with access to critical data and the ability to track illegal activity and enforce compliance.(Section 3)
“ISA 2025 broadens the scope and definition of securities to include virtual and digital assets such as cryptocurrencies and investment contracts.
“This classification brings Virtual Asset Service Providers (VASPs), Digital Asset Operators (DAOPs), and Digital Asset Exchanges under SEC’s regulatory oversight, ensuring transparency and investor protection in the digital asset space. (Section 26),” he added.
Uwaleke, who is the President of ACMAN, said the Act empowers the Securities and Exchange Commission (SEC) to prosecute Ponzi scheme operators, with penalties including 10-year prison sentences and fines of not less than ₦20 million. It also allows the SEC to recover profits gained through fraudulent activities, ensuring restitution for affected investors. (Section 192)
He further stated that the Act allows the Investor Protection Fund (IPF), established by securities exchanges, to cover investor losses linked to the deregistration of brokerage firms, extending beyond the current coverage of bankruptcy or negligence cases. (Section 193)
The capital Market Czer disclosed that a new section (Section 218) was introduced that provides a legal framework for the regulation of commodities exchanges, collateral management companies, and warehouses that issue warehouse receipts.
“Commodities contracts and derivatives are classified as securities and regulated by the Commission. This development is expected to stimulate activities in the commodities sector, offering structured financing and reducing market risks,” he said.
While stating that the Investment and Securities Tribunal (IST) has been given exclusive jurisdiction by the Act to adjudicate on disputes arising from investments and securities transactions in Nigeria, Uwaleke said the Tribunal, shall conduct its proceedings in such manner as to avoid undue delays and shall dispose of any matter before it finally within three months from the date of the commencement of the hearing of the substantive action.
Prof. Uwaleke also mentioned that despite the significant strides made by the ISA 2025, several gaps and unresolved issues remain in terms of market regulation and investor protection. He submitted that there are still potential loopholes that market participants could exploit—especially in areas where the law is broad or ambiguous.
The former Commissioner of Finance, Imo State, pointed out that the ISA 2025 does not adequately address cross-border securities trading or regulatory cooperation with foreign jurisdictions, adding that foreign platforms offering securities or crypto products to Nigerian users may not fall under the SEC’s jurisdiction if they have no local presence.
“Offshore investment apps serve Nigerian users without fully complying with ISA 2025 (eg Trove, Bamboo, Risevest, Chaka, Passfolio, and Hedge which offer access to U.S and Chinese stock markets as well as Binance/Kraken for crypto based investments) Platforms like Trove and Bamboo partner with U.S.-based custodians.
“As Nigerian investors increasingly access foreign investment platforms (and vice versa), regulatory gaps may expose them to unprotected risks. Investors using such platforms may have no legal protection in case of fraud or platform collapse.
“If the platform’s custodians or brokers fail, investors may lose access to their assets. Offshore apps may not prioritize cybersecurity or customer support for Nigerian users. Investors have no recourse under Nigerian law in the event of fraud or loss. Nigerian investors may not qualify for protections like the U.S. SIPC or U.K. FSCS,” he said.
Uwaleke also posited that while the Act regulates digital assets, it does not fully integrate oversight for emerging financial technologies like Robo-advisors, or Algorithmic trading.
“For example, no specific provisions on fiduciary obligations of Robo-advisors, or disclosure of algorithm risks. Regulatory arbitrage could emerge, especially in the overlap between SEC, and CBN,” he said.
He therefore, recommended harmonized regulatory framework for fintech, possibly through a dedicated Fintech Regulatory Sandbox codified in law.
He also advised that legal authority should be granted to a cross-agency committee, chaired by the SEC DG, to establish and manage the sandbox setting out governance structures, including inter-agency collaboration.
The ACMAN President revealed that the ISA 2025 lacks explicit provisions mandating Environmental, Social, and Governance (ESG) disclosures for public companies. Public companies may under-report non-financial risks (e.g., ESG issues or contingent liabilities) due to weak enforcement.
This, he said would limit informed investment decisions and could lead to asset mispricing or hidden systemic risks. It hinders Nigeria’s alignment with global trends in sustainable finance and could deter ESG-conscious institutional investors.
Urging for update disclosure frameworks to require listed firms to report on climate-related and sustainability risks.
Uwaleke also said that the ISA 2025 expands capital market access but lacks adequate provisions to protect retail investors in private placements or crowdfunding ventures. Which he said could expose unsophisticated investors to high-risk products without adequate risk warnings or disclosure standards.
He therefore, recommended suitability tests and tiered investor classification similar to those used in developed markets (e.g., “accredited investors” vs. general public).
“The Act is light on whistleblower protection, or incentives for early detection of insider trading and market abuse. Lack of incentives or protection discourages internal reporting of market abuse. This reduces the likelihood that corporate malpractices are reported, limiting early regulatory action. Insider fraud and misconduct may go undetected,” he added.
Suggesting “a dedicated whistleblower protection framework with legal safeguards and structured rewards. Develop a Capital Markets Whistleblower Framework: legal protection, SEC-managed hotline, and performance-based incentives.”
He concluded that while ISA 2025 strengthens the Investments and Securities Tribunal (IST), it does not provide for legal aid schemes or structured class action.Noting that many aggrieved retail investors may be unable to seek redress due to cost or procedural barriers.
“Both the South Africa’s Financial Sector Regulation Act (FSRA), and Ontario’s (Canada) Securities Act recognize class actions in financial and capital market disputes with minimal individual investor involvement.
“In the USA, the Federal Securities Law enables investors to sue as a group when defrauded in the securities market, and in India, the SEBI Act allows class action suits by shareholders against companies for mismanagement or fraud. Investor Protection Funds exist on major stock exchanges for minor claims,” he said.
Prescribing an Institutional support for group litigation, or arbitration support funded by the Investor Protection Fund.
