The Nation Newspaper

Tag: IPF

  • Photo: IPF media parley in Lagos

    Photo: IPF media parley in Lagos

  • Investor Protection Fund to compensate share fraud victims

    Investor Protection Fund to compensate share fraud victims

    The Investor Protection  Fund (IPF) of the Nigerian Stock Exchange (NSE) may disburse as much as N130 million as compensations to investors who were victims of fraudulent activities by unscrupulous stockbrokers.

    The Fund has concluded arrangements to pay the first batch of compensations after its board of trustees finally agreed on operating structures and framework for the scheme.

    Sources at the weekend indicated that the IPF could distribute some N130 million to investors based on the claims and the payment rules of the fund.

    The Nation’s check indicated that most of the claims were referred to the  IPF by the NSE. The IPF rules allow the NSE to submit complaints made to it to the IPF while investors can also directly petition the IPF.

    Part XIV of the Investment and Securities Act (ISA) 2007 requires the Exchange to establish and maintain an investors protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business as a capital market operator.

    NSE’s Chief Executive Officer, Mr Oscar Onyema, who is a member of the NSE IPF’s board of trustees, had said the Fund would be paying compensations to 343 investors in its maiden payment.

    He confirmed that arrangements have been concluded for the payment and the beneficiary-investors are currently undergoing the process of identity verification to establish that they are the real owners of the affected shares’ accounts.

    According to him, the board of the NSE IPF has already capped the maximum payment per claim at N400,000.

    The Nation had exclusively reported that the maiden disbursement of Fund would happen soon.

    An impeccable source  had said the board of IPF was rounding off operating structures and framework for the scheme and would roll out its maiden compensation soon to announce the commencement of effective operations.

    The source said after the approval of the IPF rules by the Securities and Exchange Commission (SEC), the board of trustees of IPF had gone back to the drawing board to ensure that it fashioned effective operating structure and framework that will sustain the scheme.

     

  • Investors Protection Fund finalises draft rules

    The Board of Trustees (BoT) of the Investors Protection Fund (IPF) of the Nigerian Stock Exchange (NSE) is finalising the draft rules for the IPF.

    It would be recalled that the board of IPF had prepared a new set of draft rules governing the operation and effective management of the fund on June 11. These rules were made available to stakeholders on June 14, this year.

    Head, Public Relations, Nigerian Stock Exchange (NSE), Mr Dante Martins, said the Exchange has received comments from stakeholders and has made necessary amendments to the rules.

    He said the final draft will soon be presented to the Securities and Exchange Commission (SEC) for its approval in line with the provisions of Section 201(b) of the Investment and Securities Act 2007.

    According to him, a lot of work is going into ensuring that the rules of the IPF are well-structured given the importance of investors’ protection in the Nigerian capital market.

    Part XIV of the Investment and Securities Act 2007 requires the Nigerian Stock Exchange to establish and maintain an investors protection fund to compensate investors with genuine claims of pecuniary loss against Dealing Member firms resulting from insolvency, bankruptcy or negligence of a Dealing Member firm of a securities exchange or capital trade points; and defalcation committed by a Dealing Member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the Dealing Member firm in its course of business as a capital market operator.

  • Market abuses: Investors Protection Fund may not be enough

    The Investors Protection Fund (IPF) may not be able to cover all cases of market abuses and fraudulent practices against investors given the size and frequency of market infractions and the fund.

    President, Chartered Institute of Stockbrokers (CIS), Mr Ariyo Olushekun, said it appeared the IPF might not be enough to protect investors on a sustainable basis because the incidence of market abuses and fraudulent malpractices in the past has overwhelmed the existing fund available.

    According to him, the challenge before the new board of trustees of the IPF is to manage and grow the fund in a way to meet its objectives.

    The IPF was established to compensate investors with genuine claims of pecuniary losses against dealing members of the Nigerian Stock Exchange (NSE) due to insolvency, bankruptcy, negligence of a dealing member firm and abuses committed by directors, officers, employees or representatives in relation to securities, money or any property entrusted to or received by the broker in the course of its business as a capital market operators.

    IPF has about N625 million with a first generation bank. Mr Gamaliel Onosode chairs the nine-man board of IPF, which includes the Managing Director of the Nigerian Stock Exchange (NSE), Oscar Onyema; Misan Kofi-Senaya, managing director of Central Securities Clearing System (CSCS), Mr Kyari Bukar, Chief Sola Abodurin, Fubara Anga, Edosa Kennedy Aigbekaen, Sam Onukwe and Umaru Modibo.

    Olushekun, who spoke at the SEC Journalists’Academy in Abuja, said the best most effective way to protect investors is to institute and enforce proactive measures that enhance market integrity and forestall abuses.

    “The importance of effective regulation in the capital market cannot be overemphasized. Regulations must be designed to address current market realities and by this, they must be up-to-date and relevant. The importance of regulation and enforcement of rules is paramount in investors protection and in gaining investors confidence,” Olushekun said.

    He outlined that certification, continuous training and effective disciplinary measures of the CIS have proved to be major contributors to protection of investors as stockbrokers are usually wary of infringing on codes of ethics and professional guidelines set by CIS.

    According to him, stockbrokers help to protect investors from vagaries of the market and possible abuses by giving quality investment advice that takes into consideration investor’s investment objective, the risk-return profile of investment opportunities and the capacity of the investor to undertake the risk.

    He noted that the CIS plays central roles in ensuring that brokers have adequate knowledge and skills as well as keep to market rules and regulations.

    He pointed out CIS’s code of ethics and standards of professional conduct ensure that stockbrokers at all times give priority to the interest of the investors and the capital market.

    According to him, CIS’s code of ethics and standards of professional conduct ensure fair dealing with existing and potential clients, preservation of client’s confidentiality, fiduciary duties, and general responsibilities to clients and the market.

    “All of these cannot be achieved without discipline. CIS has an effective adjudicating and disciplinary machinery which promptly attends to complaints on any member of the institute and metes out appropriate sanctions as deemed necessary on proven professional misconduct,” Olushekun said.

    He assured that the CIS has created different platforms to ensure that stockbrokers are well equipped to perform their roles effectively while ensuring investors protection in the capital market.

    Olushekun’s statement came just as the NSE cautioned investors not to misconceive the IPF for insurance scheme.

    Executive director, market operation and technology, Nigerian Stock Exchange, Mr. Adeolu Bajomo,said IPF was not an insurance policy which an investor can make claim on but a protection scheme for investors who genuinely made transaction with stockbrokers but such deal was not executed or was somehow defrauded by the stockbrokers.