Section 127 Investments and Securities Act

Section 127 of the Investments and Securities Act 2025 is about Dealing as principal. It is under Part X (Conduct of Securities Business) of the Act. It provides as follows:

(1) A securities dealer shall not as a principal deal in any securities with a person who is not a securities dealer except as permitted under subsection (3).

(2) A reference in this section to a securities dealer dealing or entering into a transaction as principal includes a reference to a person —
(a) dealing or entering into a transaction on behalf of a person associated with him;
(b) dealing in securities on behalf of a body corporate in which he has a controlling interest; or
(c) who carries on business as a dealer for a body corporate in which his interest and the interests of his directors together constitute a controlling interest.

(3) A securities dealer who, as a principal, enters into a transaction of sale or purchase of securities with a person who is not a securities dealer shall state in the contract note or transaction confirmation that he is acting in the transaction as principal and not as agent.

(4) Where a securities dealer fails to comply with subsection (1) or (3) in respect of a contract for sale of securities by him, the purchaser of the securities may, if he has not disposed of them, rescind the contract by a notice of rescission in writing given to the securities dealer not later than 30 days after the receipt of the contract note.

(5) Where a dealer fails to comply with subsection (1) or (3) in respect of a contract for the purchase of securities by him, the vendor of the securities may, in like manner, rescind the contract.

(6) Nothing in subsections (4) and (5) shall affect any right which a person has apart from the provisions of these subsections.

(7) A person who contravenes or fails to comply with any of the provisions of this section, commits an offence and is liable on conviction to a fine of not less than N1,000,000, or an amount equivalent to four times the amount involved in the transaction, whichever is higher or to imprisonment for a term not more than six months or both.

(8) The Commission may, in lieu of prosecution under subsection (7), impose a penalty of not less than N5,000,000 and a further sum of not less than N10,000 for every day the violation continues.