The Securities and Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) are to sanction indicted companies’ directors, including seizing their assets.
In what appeared to be a renewed push in line with the government’s anti-corruption campaign, sources said the capital market authorities would henceforth go after directors of companies that abused their offices and took advantage of their positions to undermine corporate performance.
Interim report by the Central Bank of Nigeria (CBN)-appointed new board for a quoted bank indicted the sacked directors of the bank of corporate governance failures, resulting in near collapse of the bank, which led to the apex bank’s intervention.
Also, the Supreme Court recently ordered three former managing directors of three defunct quoted banks – Mr Okey Nwosu of Finbank Plc, Dr. Erastus Akingbola of Intercontinental Bank and Mr Francis Atuche of Bank PHB-to stand trial for alleged fraud. Akingbola was accused of stealing N47.1 billion while Atuche and Nwosu were accused of stealing N25.7 billion and N18 billion, totalling N90 billion.
Regulatory sources said SEC and NSE would adopt any indictment against the directors by applying capital market laws, in addition to any penalty the non-capital market enforcement jurisdictions might have imposed in their indictments.
“In the event of an indictment by other regulatory agencies, the Exchange will adopt such indictment and will not undertake its own separate investigation,” a management source at the NSE had told The Nation.
The source noted that companies listed on the Exchange are required to comply with the SEC’s Code of Corporate Governance for Public Companies in Nigeria, which empowers SEC to enforce corporate governance rule, including imposition of penalties on directors for breach of the code.
Investors have lost more than N3 billion in market value in the latest takeover of a quoted bank by the CBN on the allegation of corporate abuses and mismanagement. Similar takeover of Intercontinental Bank, Bank PHB and Finbank had led to massive losses for investors. CBN’s takeover of allegedly poorly run banks has been a major disruption and source of losses for investors. Within eight days of the takeover of Bank PHB and others, investors in banking stocks had lost N329 billion, which also contributed to the long-running recession at the stock market.
The Investment and Securities Act (ISA) empowers SEC to seize the assets of persons and institutions that undermine the integrity of the capital market, abuse their offices, provide false or misleading information and act in a way that willfully undermine corporate performance and investors’ trust.
The ISA empowers SEC to “in furtherance of its role of protecting the integrity of the securities market, seek judicial order to freeze the assets (including bank accounts) of any person whose assets were derived from the violation of this Act, or any securities law or regulation in Nigeria or other jurisdictions”.
The ISA vested SEC with the responsibilities and powers to “act in the public interest having regard to the protection of investors and the maintenance of fair and orderly markets” as well as to “protect the in0tegrity of the securities market against all forms of abuses including insider dealing”.
The Act also empowers SEC to “call for information from and inspect, conduct inquiries and audit of securities exchanges, capital market operators, collective investment schemes and all other regulated entities”.
