An Assessment of the Legal Regulation of Insider Trading Under the Investment and Securities Act in Nigeria

Insider trading undermines market integrity and erodes investor confidence in capital markets, yet its legal regulation under Nigerian securities law remains inadequately enforced relative to the scale of suspected violations on the Nigerian Exchange Group. This study assesses the effectiveness of the Investment and Securities Act 2007 and its proposed 2024 amendment in prohibiting and sanctioning insider trading. A doctrinal and descriptive approach was adopted, combining analysis of statutory provisions with review of Securities and Exchange Commission enforcement actions between 2018 and 2023. Semi-structured interviews were conducted with 20 capital market operators and legal practitioners in Abuja. Findings reveal that the SEC prosecuted only seven insider trading cases during the five-year period studied, despite industry estimates suggesting far greater prevalence. Evidentiary challenges in proving intent and access to material non-public information were identified as the primary prosecution barriers. The proposed Investment and Securities Act amendment introduces burden-shifting mechanisms that could improve prosecution success rates. Sanctions under the existing framework were assessed as insufficiently deterrent, with maximum fines substantially lower than comparable jurisdictions. The study concludes that legislative reform alone is insufficient without a concurrent strengthening of SEC investigative capacity, inter-agency data sharing arrangements, and judicial specialisation in securities litigation. Recommendations include establishment of a dedicated financial crimes tribunal and adoption of whistleblower incentive schemes modelled on the United States Securities and Exchange Commission programme.

Keywords: insider trading, Investment and Securities Act, Securities and Exchange Commission, capital markets, Nigeria