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Tag: SEC

  • SEC chief promises to create products to woo investors

    SEC chief promises to create products to woo investors

    The Director-General, Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo, has promised that the Nigerian Stock Exchange (NSE) is planning to create products that will encourage new investors to invest in the market.

    A statement from the SEC said Gwarzo spoke in an interview with CNBC Africa, in London, monitored in Abuja. Gwarzo said efforts are being made to bring Pension Funds Administrators (PFAs) into the NSE platform.

    This, he said, will make the capital market competitive and attract more investors that will in turn improve the nation’s economy, just as he added that the commission is also working out the possibility of a unified corporate governance structure.

    He said: “We still operate with very few products and one of the things we are doing is to as much as possible engage PenCom to come with guidelines for PFAs who will invest in those funds. We are aware that PFAs can only invest in an instrument that is secured. We will encourage development of new products in the market.

  • SEC to governors: You’re free to borrow but…

    SEC to governors: You’re free to borrow but…

    The Securities and Exchange Commission (SEC) has urged state governors to go ahead and borrow in order to augment the allocation but with a caveat: such borrowings must not be for consumption.

    A statement by the SEC Director General Mounir Gwarzo in Katsina at the SEC Day at the ongoing 18th Katsina State Trade Fair, he said cheap funds can be accessed through equities, bonds or mortgage bond securities.

    Represented by Head Kano Zonal office of SEC, Malam Adamu Sambo, Gwarzo, said the Nigerian capital market has the capacity to provide long term funds needed to solve the infrastructural challenges in the country and act as a springboard that would fast track development of their states.

    He disclosed that the Commission was attending the fair in order to manifest one of its broad functions which is to carry out enlightenment on the activities in the market.

    “We are here to enlighten the Katsina state government and its people on the need for them to take activities in the market as a means for development. We have a new government in place and we hope that they will access the capital market to raise floating funds to meet their development needs.

    “The President has already said he is keen on development of the country and we therefore urge the state governments to use the capital market as a channel to raise funds. States have a lot of potentials and we believe that they can use the capital market as one of the means of achieving their potential,” he said.

    He noted that both the federal and state governments in the last dispensation tasted the potential of the market as over N500 billion was raised from the nation’s bourse through bonds by various states for infrastructure development between 1999 and 2013. Gwarzo expressed dismay at the attitude of some state governments who claim they do not want to borrow funds for development in order not to leave the states with huge debts saying such attitude is counterproductive as it is better to borrow to meet infrastructural needs than to be contented with just paying salaries.

    He said “indebtedness is not bad, what is bad is a situation where such funds are used for consumption. If there is commensurate infrastructural development on ground, there is no regret in borrowing. Even abroad, states borrow for development.”

    Gwarzo therefore urged the state governments to embrace the capital market in their economic strategy in other to meet the needs and aspirations of their people.

  • SEC suspends BGL’s firms, Okumagba, others from capital market

    SEC suspends BGL’s firms, Okumagba, others from capital market

    Securities and Exchange Commission (SEC), yesterday came down heavily on one of Nigeria’s leading investment banking groups with the suspension of the BGL Group and its subsidiaries from all capital market activities.

    In a statement,  SEC said its decisions were based on the “report of a detailed investigation into the various complaints received from investors against subsidiaries of BGL Group”. The decisions were taken by the executive management committee at its meeting on Tuesday.

    SEC had late April intervened in the operations of BGL Group Plc, suspended its board and set up an interim management board for the group. The interim management board, headed by a former president of Chartered Institute of Stockbrokers (CIS), Mr Oladipo Aina, was mandated to conduct full investigation into the operations of BGL Group. Other members of the interim board were Mr. Abubakar Ambursa, Mrs. Hafsat Rufai, Ms. Temitayo Siyanbola and Ms. Tonne Ladipo-Ajayi.

    On the basis of the investigation report, SEC yesterday announced the suspension of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited from all capital market activities.

    The Commission also directed that all major officials and sponsored individuals of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited whose particulars are contained in the Commission’s record as at December last year  be suspended from performing any capital market activity.

    SEC particularly cited Mr. Albert Okumagba, the group managing director of BGL Group and directed that Okumagba, who was the president of CIS before the April sack of the board, should cease to be a registered sponsored individual with the Commission following the withdrawal of the registration of BGL Plc as a capital market operator.  With this directive, Okumagba, one of the most influential capital market operators, will therefore no longer be entitled to carry out capital market activities.

    Besides, the apex capital market regulator stated that it has referred what it described as “suspicious transactions” observed in the course of the investigation to the appropriate law enforcement agencies for further investigation.

    According to the statement, BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited and all individuals involved in the management of the companies have also been referred to the Administrative Proceedings Committee (APC) of SEC for further trial.

    BGL Plc is quoted on the NASD Plc, the over-the-counter (OTC) market for the trading of shares and securities of unlisted public limited liability companies. Founded in 1993 and formerly known as Banc Garanti Limited, BGL Plc commenced business as a bank holding company with the aim of acquiring distressed or underperforming institutions in the banking sector.

    It quickly built up a large portfolio of assets and earned reputation as one of the most influential investment banking firms in Nigeria. BGL Securities is the stockbroking arm of the group and it is a major dealing member of the Nigerian Stock Exchange. It is ranked variously as one of the top 20 stockbroking firms at the stock market. BGL Asset Management, a wholly owned subsidiary of BGL Plc, was incorporated in April 2007 and it deals primarily as the asset management arm of the group.

  • SEC suspends BGL Plc, Subsidiaries

    SEC suspends BGL Plc, Subsidiaries

    The Securities and Exchange Commission (SEC) has suspended BGL and its subsidiaries from capital market activities.

    A statement from the SEC said the Executive Management Committee of the Commission at its meeting held on May 19, 2015 considered the report of a detailed investigation into the various complaints received from investors against subsidiaries of BGL Group.

    Based on the submissions of the investigators, the SEC noted that “BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited be suspended from all Capital Market activities and that all Sponsored Individuals of BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited whose particulars are contained in the Commission’s record as at December 2014 be suspended from performing any Capital Market activity.”

    The SEC also ordered that “Mr. Albert Okumagba, the Group Managing Director of BGL Group, should cease to be a registered Sponsored Individual with the Commission following the withdrawal of the registration of BGL Plc as a Capital Market Operator. He is therefore no longer entitled to carryout Capital Market activities.”

    The statement added that “all suspicious transactions observed in the course of the investigation have been referred to the appropriate law enforcement agencies for further investigation; and that BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited and all individuals involved in the management of the said companies have been referred to the SEC Administrative Proceedings Committee (APC) which will give all parties to the cases a fair hearing.”

  • Senate confirms Gwarzo as SEC DG

    Senate confirms Gwarzo as SEC DG

    The Senate has confirmed the nomination of Malam Mounir Gwarzo as the Director-General of Securities and Exchange Commission (SEC).

    The News Agency of Nigeria (NAN) reports that the confirmation followed the consideration of the Senate Committee on Capital Market.

    SEC said in a statement issued in Lagos on Thursday that the Committee, headed by Sen. Ayo Adeseun, had earlier screened Gwarzo and described him as the best candidate for the position.

    The statement noted that the Committee had earlier expressed satisfaction with Gwarzo’s nomination and therefore called on the whole house to confirm his nomination by President Goodluck Jonathan.

    It stated that after his unanimous support and confirmation by senators, the Senate President, David Mark, described Gwarzo as a round peg in a round hole.

    Mark, the statement noted, urged Gwarzo to bring his experience to bear on the development of the nation’s capital market.

    Gwarzo, 52, and a fellow of the Chartered Institute of Stockbrokers (CIS), attended Bayero University Kano and graduated with Bachelors Degree in Economics in 1987.

    He also attended University of Birmingham in the UK for post graduate course in Development Finance in 1991.

    His working career spans a period of 25 years in various organisations namely; Ministry of Trade, Kano State, the Nigerian Stock Exchange (NSE), Century Merchant Bank Ltd, Empire Securities Ltd, SEC, Federal Mortgage Bank of Nigeria and MTL Global Investment Ltd, prior to joining the Board of SEC.

    He had the unique opportunity of working as an operator and regulator in both the primary and secondary markets of the Nigerian capital market for 20 years.

  • 72% of capital market operators deficient, says SEC

    72% of capital market operators deficient, says SEC

    Nearly three in every four capital market operators have not fully complied with extant registration and regulatory requirements required for their various functions, underlining the worrisome corporate governance and compliance status among operators in the capital market.

    Official status report by the Securities and Exchange Commission (SEC) obtained yesterday indicated that about 72 per cent of capital market operators have deficient registrations for their various functions.

    According to the apex capital market regulator, only 269 capital market operators are duly registered for their functions. Also, the Commission stated that there are currently 51 approved fund managers.

    Out of a total of 1,128 capital market operators listed by SEC, 808 operators have deficient registrations. A breakdown of defaulting operators showed that 189 operators have not completed the primary registration requirements for their various functions while 619 operators are currently operating with expired fidelity bonds.

    The status review highlighted that several high-brow law firms, reporting accountants, banks, investment management firms, trading and dealing firms and advisory firms are operating with incomplete registration or expired fidelity bond.

    The report indicated that several operators pose potential risks to capital market operations by not providing fidelity bond against internal malpractices, otherwise known as fidelity bond.

    Operating in the capital market without a valid fidelity bond is a contravention of the Investments and Securities Act (ISA) No. 29, 2007 and SEC Rules & Regulations.

    A fidelity bond is essentially a form of insurance against internal fraud, malpractices and willful professional negligence. It provides cushion for various losses that might arise from employee’s dishonesty. In line with international best practices, the Nigerian capital market regulation requires operators to possess subsisting fidelity bond.

    The expiration of their fidelity bonds makes the functional registration of the companies and individuals as capital market operators incomplete.

    The deficiency in the registration of the operators violated SEC’s policy on fidelity bond, which requires operators to renew their fidelity bond annually, in line with the Gregorian calendar year.

    The fidelity bond policy requires that all registered capital market operators must maintain a fidelity bond which has a validity period from January to December of each year.

    The apex capital market regulator had indicated that any fidelity bond which falls short of full-year coverage will not be accepted.

    According to the report, nearly half of operators with expired fidelity bond, and as such incomplete registration, are solicitors including high-brow Senior Advocate of Nigeria (SAN) law firms.

    Accounting firms are the second largest group of culprits with several well-known accounting firms, with registration as reporting accountants, operating with expired fidelity bonds.

    At least five banks, which were registered as issuing house or investment adviser, were listed among the defaulters while several fund managers, registrars and brokers were also listed in the search.

    Market sources, who pleaded for anonymity because of the sensitivity of the issue, said the large number of incomplete registrations and expired fidelity bonds could affect the integrity of the market place.

    According to them, such deficiencies are usually indications of poor corporate governance and financial liquidity, two factors that have been fingered in most cases of frauds in the market.

    They called on the apex capital market regulators to undertake complete review of capital market operators with a view to delisting non-compliant operators.

    SEC is finalizing the launching of a National Investor Protection Fund (NIPF), which will compensate investors for defalcations by insolvent or bankrupt capital market operators which are not dealing members of Securities Exchange or Capital Trade Points. In other words, the NIPF will be for the purpose of compensating investors whose losses are not covered under the Investors Protection Fund (IPF) administered by Securities Exchanges and Capital Trade Points. The Nigerian Stock Exchange (NSE) already has an Investors Protection Fund (IPF).

    SEC is expected to provide the initial take-off grant for the NIPF. It will subsequently generate funds through grants, subventions, donations and annual contributions to be made by all capital market operators not subject to contribute to the IPF of Securities Exchanges and Capital Trade Points. The board of the NIPF is also empowered to obtain loans, subject to approval of SEC.

    The board of the Commission has already approved the operating rules for the NIPF and it is currently in the process of announcing a board of trustees for the NIPF.

    According to the rules, investors can only receive a maximum compensation of N200, 000 from the NIPF. This maximum amount claimable under the NIPF is 50 per cent of the N400, 000 limit stipulated by the IPF of the NSE.

    According to the rules, the maximum amount payable to an investor who has suffered loss shall be N200, 000 or its equivalent in form of shares and units of bonds. However, where the amount of loss is lesser, the investor shall be paid the calculated amount of loss.

    Beside the variance in the maximum compensation, the SEC’s NIPF also differs from the NSE’s IPF in the area of recognition of previous infractions and losses. Where the NSE’s IPF took on backlog of complaints from the NSE, the SEC’s NIPF will not recognize any claim prior to establishment of the NIPF.

    “Any claim prior to the incorporation of the Fund shall not be covered by the Fund,” the rules stated.

    However, the amount of compensation to be paid by the NIPF may be reviewed from time to time as approved by the board of the Fund.

     

  • Investors’ protection: SEC caps compensation at N200,000

    Investors can only receive a maximum compensation of N200,000 from the National Investor Protection Fund (NIPF) being established by the Securities and Exchange Commission (SEC). The maximum amount claimable under the NIPF is 50 per cent of the N400,000 limit stipulated by the Investors Protection Fund (IPF) of the Nigerian Stock Exchange (NSE).

    A document on the rules and regulations of the NIPF approved by the board of SEC indicates that investors that suffer any loss due to operations of capital market operators.

    According to the rules, the maximum amount payable to an investor who has suffered loss shall be N200, 000 or its equivalent in form of shares and units of bonds. However, where the amount of loss is lesser, the investor shall be paid the calculated amount of loss.

    Beside the variance in the maximum compensation, the SEC’s NIPF also differs from the NSE’s IPF in the area of recognition of previous infractions and losses. Where the NSE’s IPF took on backlog of complaints from the NSE, the SEC’s NIPF will not recognize any claim prior to establishment of the NIPF.

    “Any claim prior to the incorporation of the Fund shall not be covered by the Fund,” the rules stated.

    However, the amount of compensation to be paid by the NIPF may be reviewed from time to time as approved by the board of the Fund.

    Besides, the rules underscored that “the Fund is not under any obligation to pay compensation to an investor”

    The rules indicated that beneficiaries of the NIPF would be investors who suffer pecuniary loss due to the insolvency, bankruptcy or negligence of a capital market operator and defalcation committed by a capital market operator or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the capital market operator in the course of its business as a capital market.

    The NIPF will cover the entire capital market activities under the regulation of SEC, a broader scope than the earlier IPF of the NSE, which covers only the operations of members of the NSE.

    SEC stated that the NIPF was in furtherance of the Commission’s mandate to regulate and develop the Nigerian capital market and in particular, its duty to ensure the protection of investors in the capital market.

    The NIPF will apply only to defalcations by insolvent or bankrupt capital market operators not dealing members of Securities Exchange or Capital Trade Points. In other words, the NIPF will be for the purpose of compensating investors whose losses are not covered under the IPFs administered by Securities Exchanges and Capital Trade Points.

    SEC is expected to provide the initial take-off grant for the NIPF. It will subsequently generate funds through grants, subventions, donations and annual contributions to be made by all capital market operators not subject to contribute to the IPF of Securities Exchanges and Capital Trade Points. The board of the NIPF is also empowered to obtain loans, subject to approval of SEC.

    Also, the NIPF can generate funding through assets, properties or cash that shall be realized from liquidated operators after compensation to investors and proceeds from investment of its resources.

    However, any client who participated in the wrongful act of the capital market operator shall not benefit from the Fund while the NIPF will also not apply to losses arising from transactions not regulated by the Commission.

    According to the rules, an investor must submit application for compensation within 12 months after the investor became aware or ought reasonably to have become aware of the status of the investments. The investor is also expected to back up his claims with relevant evidence.

     

     

     

     

     

  • SEC cancels ‘black market’ for shares, bonds

    SEC cancels ‘black market’ for shares, bonds

    Nigeria’s capital mar-ket regulator, the Se-curities and Exchange Commission (SEC), has proscribed underhand trading in the shares and other securities of unlisted public limited liability companies.

    A document on new rules and regulations approved by SEC obtained at the weekend indicated that there shall be no trading on shares, bonds and other securities of unlisted public limited liability companies outside the platform of a registered securities exchange established and registered by SEC for the purpose of facilitating over-the-counter (OTC) trading of securities.

    The new rules and regulations will have the force of law as they were made pursuant to section 313, subsection one of the Investments and Securities Act (ISA) 2007, which empowers the Commission to, from time to time, make rules and regulations for the purpose of giving effect to the Act as well as amend and revoke rules and regulations so made. ISA is the main body of law for the capital market.

    According to the new rules, all securities of unlisted public companies shall be bought, sold or transferred only by means of a system approved by the Commission and under such terms and conditions as the Commission may prescribe from time to time.

    “No person shall buy, sell or otherwise transfer securities of an unlisted public company except through the platform of a registered securities exchange established for the purpose of facilitating over-the-counter trading of securities,” the rules stated.

    Any unlisted public company, director, company secretary, registrar, broker, dealer or such other persons who facilitate the buying, selling or transfers of the securities of an unlisted public company other than through the platform of a duly registered securities exchange, shall be liable to a penalty of not less than N100, 000 in the first instance and not more than N5, 000 for every day of default.

    The Commission stated that the aim of the new rules and regulations is to ensure that all securities of unlisted public companies are traded within securities exchanges that are registered with the Commission.

    The new rule effectively cancels ‘black market’ trading on the shares of several unlisted Plcs including companies such as Fan Milk Plc and Cappa & D’Alberto Plc among others.

    The Nation had earlier exclusively reported that SEC was considering proscribing unregulated trading in shares of public limited liability companies.

    The new rules now effectively concentrates trading on the shares and other securities of unlisted Plcs on the only registered OTC platform, the National Association of Securities Dealers (NASD)  Plc.

    NASD is a registered OTC trading platform for unquoted securities including equities and bonds. Owned by several investment and financial institutions as well as strategic investors, it is registered by SEC as an organised trading platform for unlisted securities.

    NASD started trading on unlisted securities in July 2013. All investment instruments approved by SEC could be traded on the NASD including shares of unlisted multinational companies. After the initial formative period, the NASD plans to trade on commercial papers and then other complex instruments like derivatives and options.

    As an OTC market, NASD does not have a trading floor like the traditional exchange but trades through the internet and a hosted platform leased from the NSE. To facilitate its trading, the company had developed an integrated market system made up of the Central Securities Clearing System (CSCS), six settlement banks and some registrars to ensure smooth operations.

     

     

  • N15 bond: Court vacates order against SEC, NSE, Elechi

    N15 bond: Court vacates order against SEC, NSE, Elechi

    A Federal High Court sitting in Abakaliki, Ebonyi State capital yesterday vacated an interim order issued by a Federal High Court sitting in Lagos in January this year restraining the Securities and Exchange Commission, (SEC) and the Nigerian Stock Exchange,( NSE) from releasing N15 billion  bond approved for Ebonyi State government.

    This followed the application by  counsel to the state government, Mr Fedrick Onobia urging the court to vacate the injunction.

    In the ruling on the motion filed by a member of Ebonyi State House of Assembly, Odefa Obasi Odefa praying the court to restrain the state government and its agencies from accessing the bond facility, Justice Ada Onyetenu vacated the order.

    She frowned at what she described as antics of the plaintiff and the defendants in the case to defeat the course of justice and therefore struck out a motion seeking to disqualify the counsel to Ebonyi State government.

    Justice Onyetenu reserved ruling on another motion challenging the jurisdiction of the court to 6th May.

    In an interview, counsels to the plaintiff, Mr Roy Umahi and Mr Ogwudu Uche said they would challenge the ruling.

    ‘’There was a motion filed in court asking that the cousel for  the 1st -7th defendants  be disqualified in that they are parties to the bond; the subject matter of the suit,” they said.

    Ebonyi State’s Attorney-General and Commissioner for Justice, Dr Ben Igwenyi hailed the ruling of the court.

    The matter had earlier been transferred from the Federal High Court, Lagos to Abakaliki over jurisdiction.

  • SEC suspends stockbrokers over illegal shares sale, others

    SEC suspends stockbrokers over illegal shares sale, others

    NIGERia’s capital market regulator, the Securities and Exchange Commission (SEC), has suspended a stockbroking and investment firm-Woodland Capital Market, and the entire directors and other top management officers of the company over illegal sale of investor’s shares.

    In a circular, the regulator said the stockbroking firm and its directors and sponsored employees were all suspended indefinitely due to unauthorised sale of shares from an investor’s account without the owner’s mandate.

    According to the circular, the suspension was in connection with the unauthorised sale of 3,750 units of PZ Cussons Nigeria Plc shares belonging to an investor and the refusal of the stockbroking firm to comply with SEC’s directives in this regard.

    SEC has also suspended International Standards Securities Limited and the directors and employees of the stockbroking firm.

    According to SEC, the suspension of International Standards Securities and its directors and sponsored employees from all capital market activities was due to non-compliance with SEC rules and regulations and deficiencies observed in its operation during a target inspection carried out on it recently.

    With the suspension, the two firms will not be allowed to engage in any capital market activity including primary market activities and trading on the Nigerian Stock Exchange (NSE). Also, the directors and sponsored employees of the firms will not be able to partake in any capital market roles or get any capital market-related employment during the period of suspension.

    The Nation had reported exclusively that the NSE had investigated and indicted 29 stockbroking firms and four stockbrokers for alleged unauthorised sale of their clients’ shares.

    A report on shares fraud, also known as unauthorised sales of investors’ shares, had indicated that several stockbroking firms surreptitiously sold their clients’ shares and diverted the proceeds. The report by the NSE covered the 30-month period between January 2012 and June 2014.

    The report showed that nearly half of the shares frauds have been completed and the indicted stockbroking firms made to restitute the investors, a general reference to order to buy back the shares or pay the investor the value of the shares and all his entitlements.

    According to the report, 16 cases were still pending, although the NSE had then taken preemptive measure of suspending the stockbroking firms and stockbrokers. The pending cases were referred to the disciplinary committee of the council of the NSE.

    The firms, which cases were resolved and restitutions made to investors, included Adamawa Securities Limited, Dominion Trust Limited, ECL Asset Management Limited, Finbank Securities & Asset Management Limited, GMT Securities and Assets Management Ltd, Kapital Care Trust & Securities Limited, Lighthouse Asset management Limited, Marriot Securities Limited, Maven Asset management Limited, Mountain Investments and Securities Ltd, Nova Finance & Securities Limited, Prime Wealth Capital Limited, Royal Crest Securities Limited, International Standard Securities Limited and Mutual Alliance Investments & Securities Limited.

    However, firms that had unresolved cases and were under suspension included Bytofel Trust and Securities Limited, De-Canon Investment Limited, First Alstate Securities Limited, Fittco Securities Limited, Gosord Securities Limited, ITIS Securities Limited, Lakesworth Investment & Securities Ltd, Lion Stockbrokers Limited, Mact Securities Limited, Manivest Asset Management Limited, Omas Investment and Trust Limited, Securities Solutions Limited and WT Securities Limited.

    The NSE recently launched an online whistleblowing portal through which investors and other stakeholders can tip off the Exchange on perceived or known infractions. The online portal, known as X-Whistle, allows members of the public to submit information without disclosing their identity while it also provides reference that allows the whistleblower to track NSE’s response and investigation on the tip off.