The Nation Newspaper

Tag: SEC

  • Group accuses APC of preparing for war

    Group accuses APC of preparing for war

    The Save Ekiti Coalition (SEC) has accused the All Progressives Congress (APC) in Ekiti State of preparing for war in the June 21 governorship election.

    The group was reacting to Governor Kayode Fayemi’s criticism of Vice-President Namadi Sambo’s statement that the Peoples Democratic Party (PDP) was going to war in Ekiti and Osun states.

    It described Fayemi’s media attack on Sambo as hypocritical and deceitful, added that “it was the height of deceit for anyone to say that Ekiti State under Fayemi and his APC is at peace.”

    In a statement yesterday by its Convener, Mr Lere Olayinka, the SEC said: “The Vice President has assured that the principle of one man one vote, and transparent election would be observed in the Ekiti and Osun governorship elections.”

     

  • SEC gives Friday deadline to 63 deficient operators

    SEC gives Friday deadline to 63 deficient operators

    Securities and Exchange Commission (SEC) has given 63 capital market operators up till this Friday, to regularise their operational status with the apex capital market regulator or risk withdrawal of their operating licence.

    In a circular to market operators, SEC directed the companies, which included investment bankers, reporting accountants, solicitors, stockbrokers and fund managers among others, to provide necessary documents to support and update their registration status.

    A source at SEC indicated that directive to the companies was part of SEC’s ongoing effort to clear the market of inactive firms and ensure that the investing public deals with duly licensed operators.

    The source hinted that the apex capital market regulator might not extend the deadline noting that the two-week compliance period given to the companies is enough for them to provide required documents.

    The affected companies included Arnold Portfolio Co, an individual investment adviser; Austin Mwana & Co, Ayo Kasumu & Co, Balogun & Balogun, Bendu Peter Ser. Nigeria Limited, Capital Chambers, Chancery Advocates, Chika Egwuatu & Partners, Co-Link Investment & Management Company Limited, Cosmic Chambers, Dambale (Nigeria) Limited, Danladi Bamaiyi & Co, David & Moore, E. Duro Alalade & Co, Eddy Okpiabhele & Co, Equibond Securities Limited, Equinox Asset Management Limited, Ezugo Isiadinso & Partners, FB Asset Management Limited, Femi Ajijala & Co, Frank Ilonyosi & Co, H. B. Fabunmi & Co, Hassan, Nakpodia & Co, Heap Investment Limited, Honey Comb Asset Management Limited, Irving & Bonnar, Jubilee Global Fund Plc, Kendall Securities Limited, Lakesworth Investment & Securities Limited, LASACO Assurance Plc, Lateef O. Fagbemi & Co, Leadway Assurance Co, Maj-Gen Ibrahim Bata Malgwi Haruna (rtd), MGI Alabi, Ekundare, MICC Consult-Mashasha Investment & Commerce Company Limited and Mohammed Yamah & Company, a firm of solicitors.

    Others included Mojibola Oluwa & Co, O.Thomas & Co, Olajuwon Omotimirin & Associates, Olusegun Olunuga & Co, Olusola Ibidapo-Obe & Co, Olutayo Adenekan & Co, Oluwole Akanle & Co, Osindero Oni & Lasebikan, Osunbade, Okiti & Co, Pan Securities Limited, Petroleum Investment Management Limited, Platinum Capital Limited, Prudential Securities Limited, Regency Financings Limited, S. S. Afemikhe & Co, Seclink Nigeria Limited, Sekat Company, Shoroye & Associates, Smith,Sule & Associates, Solace Chambers, Stan Consultants Nigeria, Supo Ojo & Co, Synergy Investment & Securities Limited, T. A. Oke, Tochukwu Onwugbufor & Co, Victor & Charles and Visa Investments & Securities Limited, a portfolio management firm.

    It should be recalled that SEC had recently changed its fidelity bond policy for capital market operators. All registered capital market operators are henceforth required to maintain a fidelity bond which has a validity period from January to December of each year.

    According to the Commission, any fidelity bond which does not conform to this standard will henceforth not be accepted.

    “Note that 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 Pursuant to the Act,” SEC stated.

    A fidelity bond is essentially a form of insurance against internal fraud, malpractices and wilful professional negligence. It provides cushion for various losses that might arise from employee’s dishonesty.

    The announcement of change in fidelity bond policy, otherwise known as professional indemnity policy, came on the heels of recent exclusive report by The Nation that some 213 capital market operators including several high-brow law firms, reporting accountants, banks, investment management firms and advisory firms are operating with expired fidelity bond.

    A recent status review undertaken by The Nation on the condition of capital market operators showed that some 213 capital market operators pose potential risks to capital market operations by not providing fidelity bond against internal malpractices.

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

    According to report based on data provided by SEC, about 46 per cent of operators with expired fidelity bond and incomplete registration are solicitors including high-brow Senior Advocate of Nigeria (SAN) law firms. At least, 97 law firms registered as solicitors have expired fidelity bonds.

  • Mutual funds lose N36b in 10 weeks

    Mutual funds lose N36b in 10 weeks

    •Net assets drop to N117b

    Mutual funds are trailing the bearishness at the stock market as net assets of collective investment schemes (CIS) dropped by more than N36 billion within 10 trading weeks.

    Reports on assets of mutual funds collated by the Securities and Exchange Commission (SEC) and analysed by The Nation indicated that mutual funds have lost considerable value so far this year while they showed marginal growth over a year period. The performance of mutual funds generally appeared to fall below average benchmark performance at the Nigerian stock market.

    Mutual funds, otherwise known as collective investment schemes (CIS), are joint investment vehicles through which investors can pool funds and invest in chosen basket of securities under a professional management with a view to optimize returns and reduce risks.

    Net asset value is determined by subtracting total liabilities of a fund from its total assets. The net asset value can further be divided by the total number of units of the fund to determine the unit price.

    A mutual fund is usually categorized by the class of assets that forms the primary focus of its investments. Thus, there are equity funds, money market funds, bond funds, real estate funds, ethical funds and balanced funds among others.

    The latest report on mutual funds for the period ended March 14, 2014 showed that overall net assets of all mutual funds stood at N117.37 billion as against N153.54 billion recorded by the period ended January 03, 2014, indicating a drop of N36.2 billion over the 10-week period.

    The performance of mutual funds was adversely affected by the downtrend in the equities segment, which recorded a loss of 14.89 per cent during the period. According to the report, equity-based funds, which opened this year as the largest segment, dropped to a third place with a net assets value of N40.14 billion as against its value of N47.07 billion by January 03.

    Money market funds, which invest mainly in money market instruments such as treasury bills, shot up to the first position with net assets value of N48.02 billion compared with N27.25 billion that opened the period.

    Real estate funds sustained its second position with net assets of N43.81 billion, almost unchanged from N43.53 billion recorded at the beginning of the year. Bonds funds, with nine mutual funds, witnessed marginal increase from N15.52 billion to N15.96 billion.

    The downtrend in the equities market also impacted on balanced funds- mutual funds that seek to invest in a balanced mixture of equity and debt instruments; as net assets value for the segment dropped from N10.22 billion to N8.23 billion. Ethical funds, which also depend largely on equities, also dropped from N7.17 billion to N6.46 billion.

    Umbrella funds, which are run entirely by Stanbic IBTC Asset Management, dropped from N2.5 billion to N2.44 billion.

    UPDC Reit remained the largest mutual fund with marginal increase in net asset from N27.29 billion to N27.56 billion. Stanbic Money Market Fund, the second largest fund, also saw increase in net asset value from N19.71 billion to N22.37 billion while the FBN Money Market Fund placed third with net asset value of N22.04 billion.

    Extended analysis for a year period meanwhile showed marginal increase of N9.77 billion in net assets value of mutual funds between March 15, 2013 and March 14, 2014. By March 15, 2013, total net assets value of mutual funds stood at N107.60 billion. The number of mutual funds has also increased from 49 in March 2013 to 52 by March, this year.

    The latest report again underscored the hangover of the 2008-2009 capital market recession on mutual funds. The Nation’s return analysis of mutual funds’ value change based on the opening and closing bid prices for 2013 had indicated that nearly all listed mutual funds fell below average return by the ASI during the year. The bid price is the price that the fund manager is willing to purchase a unit of a mutual fund at a given period.

    Most mutual funds’ returns fell significantly below average returns by some equities’ groups including the top-level 30 most capitalized stocks, oil and gas sectoral index, industrial goods index and the NSE Lotus Islamic Index; all of which outperformed the benchmark index.

    Returns by mutual funds, which included equities, fixed-income and mixed funds, ranged from -1.61 per cent to 31.5 per cent. Out of the 21 mutual funds tracked by The Nation, five were static; one recorded a negative return while others recorded various gains.

    Afrinvest (West Africa) Equity Fund recorded a return of 31.5 per cent. Paramount Equity Fund posted a return of 28.7 per cent. Coral Growth Fund returned 25.9 per cent while Stanbic IBTC Nigerian Equity Fund recorded a percentage change of 2.7 per cent.

    Other mutual funds with positive returns included BGL Nubian Fund, 15.4 per cent; UBA Balanced Fund, 3.1 per cent; Stanbic IBTC Guaranteed Investment Fund, 9.2 per cent; Nigeria International Debt Fund, 6.9 per cent; BGL Sapphire Fund, 3.5 per cent; The Frontier Fund, 8.4 per cent; Coral Income Fund, 7.9 per cent; Lotus Capital Halal Investment Fund, 1.3 per cent; BGL Sapphire Fund, 3.5 per cent; UBA Money Market Fund, 2.7 per cent; Canary Growth Fund, 6.1 per cent while FBN Heritage Fund recorded a return of 8.6 per cent.

    Static mutual funds included Intercontinental Integrity Fund, now known as Access Integrity Fund, ARM Aggressive Growth Fund, Continental Unit Trust, Fidelity Nigfund and Legacy Fund.

    The main index at the NSE, the All Share Index (ASI)-a common value-based index that tracks all quoted equities, had recorded full-year return of 47.19 per cent in 2013 rising from its opening index for the year of 28,078.81 points to close the year at 41,329.19 points. The performance in 2013 significantly surpassed the much applauded return in 2012 when equities posted average return of 35.45 per cent, equivalent to capital gains of N2.44 trillion.

    Aggregate market capitalisation of all quoted equities on the Nigerian Stock Exchange (NSE) closed 2013 at N13.226 trillion as against its opening value of N8.974 trillion for the year. This represented a whooping increase of N4.252 trillion.

    Meanwhile, Director-General, Securities and Exchange Commission (SEC), Ms Arunma Oteh, has said the apex capital market regulator is concluding arrangements on a uniformed global reporting standard for mutual funds.

    According to her, SEC is favourably disposed to the adoption of the Global Performance Standards (GPS) as the uniform reporting format for mutual funds in order to enhance the outlook of mutual funds in Nigeria.

    “We have less than 200,000 who are leveraging into CIS funds to save and invest. There is clearly room for more to be done. We have about $1 billion of funds under management that is very small for a country of 167 million people. So the potential is enormous. One of the things we are looking at doing, hopefully we will be able to achieve it this year, is to make sure that we have a common standard for reporting on performance so that the investors can compare one from another,” Oteh said.

    The Fund Managers’ Association of Nigeria (FMAN) has also said it plans to establish a robust nationwide distribution platform that will make mutual funds available to the nooks and crannies of the country.

    President, Fund Managers’ Association of Nigeria (FMAN), Mr. Micheal Oyebola, said FMAN aims to raise the profile of Nigerian fund managers as well as promote and increase awareness of their expertise in managing segregated investment mandates and mutual funds.

    According to him, one of the key objectives of FMAN over the next two years is to establish a robust fund distribution platform for all SEC-registered fund managers.

    Oyebola, who is also the managing director and head of FBN Capital Asset Management, a member of FBN Holdings Plc, said while there is dearth of knowledge about the investment market, there has been increased penetration in recent period.

    “Investors are showing more interest in income generating mutual funds and so we do anticipate a trend in either existing mutual funds paying a dividend or investment houses launching dividend paying products,” Oyebola said.

  • SEC contacted investment companies with Russian exposure

    United States (US) securities regulators contacted public funds with investments in Russia to make sure they are properly managing risks and disclosing their holdings to investors as political tensions rose over Crimea, according to several people familiar with the matter.

    Attorneys with the US Securities and Exchange Commission (SEC) started to place calls to registered investment companies such as mutual funds and exchange-traded funds more than a week ago, the sources said.

    The calls are a routine part of how the SEC monitors asset managers through its Division of Investment Management, and are not related to any investigation.

    But they come during a period of turbulence for Russian stocks, which have been volatile since March 3 when mounting tensions with Ukraine over the Crimean Peninsula sent Russia’s benchmark stock index tumbling 12 per cent.

    Russian stocks fell 14 per cent between February 28 and March 14, but have recovered 6.6 per cent this week. They are now down 12.3 per cent so far in 2014. The ruble hit a two-week high last Wednesday after dropping to record lows on Monday.

    The people familiar with the calls told Reuters that SEC lawyers are not trying to tell funds how to invest, advice which would not be in the SEC’s mission.

    Rather, the regulators are focused on whether funds are being open with investors, and whether the funds are thinking and preparing about how they might respond to different scenarios or outcomes.

    “We want to be proactive, so we are making sure the firms are thinking about it,” SEC Investment Management Division Director Norm Champ told Reuters.

    The SEC’s routine reviews include making sure funds are not omitting or misrepresenting material information to the marketplace.

    In at least one case, a source said, the SEC did not question the fund’s existing disclosures, but urged the fund to consider updating its disclosures in the future to address the events in Crimea.

    The contacts by the SEC began well before White House spokesman Jay Carney warned US investors away from Russian stocks at a news briefing last week.

    In an unusual statement, he said those stocks could lose value because of sanctions that the United States and European Union have put in place and others that they could add. The United States and the EU imposed travel bans and asset freezes on a number of officials from Russia and Ukraine after Moscow declared the Crimean Peninsula a part of Russia.

    The SEC has been particularly interested in speaking with funds that have more than 10 percent exposure to Russian securities, including stocks and bonds, one person familiar with the agency’s activities said.

    Fund companies that have received calls from the SEC told the regulator they believe their disclosures are sound and adequate, two sources said.

    Funds with at least 10 per cent exposure to Russian stocks include the ING Russian Fund, T Rowe Price Emerging Europe Fund, Fidelity Emerging Europe Middle East Africa Fund, Goldman Sachs BRIC Fund and the Templeton BRIC Fund, according to a list compiled by Lipper, a unit of Thomson Reuters.

  • Why public offer market is down, by SEC

    Why public offer market is down, by SEC

    Securities and Exchange Commission (SEC) has attributed the lull in the initial public offering (IPO) market to the hangover of the 2008 recession in the capital market and the stringent rules and process for floating of IPO.

    Director-General, Securities and Exchange Commission (SEC), Arunma Oteh, said the development was a global phenomenon due to depression in values of quoted equities, which discouraged entrepreneurs from floating IPOs for their firms.

    According to her, because the promoters have invested a lot of hard work into building their businesses, they will want to get optimum values for the shares.

    “So, when valuation was depressed, it would have been difficult for people to come to the market. So, what we are seeing today is that people are starting to look at the market again for valuations and where they feel comfortable enough to come in. The second thing is that the process of an IPO is a very long process and one of the things that makes it different from the past in terms of IPOs is that you have to meet certain requirements like International Financial Reporting Standards (IFRS). So, if you were a company that was not reporting under IFRS, you need to go and fix that first and it is very elaborate process to change from Nigerian GAP to IFRS,” Oteh said.

    She said the regulators were not only concerned about floating of IPOs but the quality of the offers and would ensure that companies come to the market when they are ready.

    She added that listing requirements which would not enable any company to come to market except the company has been in business for a long time also adversely affected the market noting that the new flexible regulations under the Alternative Securities Market (ASeM) will enable emergent companies with good prospects to raise funds from the market.

    She expressed optimism that the IPO market would soon pick up noting that the Nigerian Stock Exchange (NSE) has become much more market-oriented and it is now prospecting for new listing.

    She blamed the delay in the implementation of electronic IPO on the uncooperative attitudes of market stakeholders pointing out that SEC had identified the issue of e-IPO as a major task but had to step down because of some stakeholders’ attitudes to policy formulation.

    “The issue about the e-IPO is a very important one, but one of the issues I recognised very quickly when I came to Nigeria is that in Nigeria when you want to do something new, you take time and consult stakeholders. Look at what you are saying about recapitalisation, the stock brokers were involved in the process, after the thing is out, there is an issue. So consultation is a big part of our culture.

    ‘’Last year, SEC released a statement, saying that we need to have e-dividend. Not for the benefit of the SEC but for the benefit of individual investors. Who were those who complained? It is the individual investors themselves. We were worried that we have unclaimed dividends and peoples dividends were stuck and they were not getting them, but with e-dividend they can get it directly. And the people who were supposed to receive the benefits were the ones complaining. So you take account of your environment before you embark on something,” Oteh said.

  • SEC calls for inclusive financial access for women

    SEC calls for inclusive financial access for women

    Securities and Exchange Commission (SEC) has stressed the importance of financial access to women as a major catalyst for national development.

    Speaking during the SEC Learning Series’ programme in commemoration of the International Women Day, director general, Securities and Exchange Commission (SEC), Ms Arunma Oteh underscored the importance of financial literacy and saving and investment among women.

    She noted that the United Nation’s theme for this year’s celebration-”Inspiring Change” gives reason to be really proud of the great Nigerian women who have inspired change in the nation and have led various efforts for the country’s development

    According to her, SEC is determined to see women achieve economic empowerment but more importantly, it wants to celebrate the critical role of the woman in nurturing children and giving them the best of love and attention.

    She pointed out that women all over the world are faced with societal realities that threaten to limit their achievements and prevent them from attaining their economic potentials.

    “But of the many realities that women face, there is perhaps none as disenfranchising as poor access to finance. A recent study by the IFC showed that women-owned SMEs are particularly a financially undeserved segment. They are not only less likely to obtain formal financing; they also often get charged higher interest rates,” Oteh said.

    Citing a World Bank report on “Investment Climate in Nigeria”, she noted that about 76 per cent of women rely on informal sources of funds and savings in sharp contrast to only about one per cent that obtained capital from the formal sector.

    “Many other surveys have reported women being denied bank loans in high numbers. In addition to limited access to finance, women face discriminatory customary and other practices in inheriting land and property. In Nigeria, although women make up between 60 to 79 percent of rural workforce, they are five times less likely to own land than men,” Oteh noted.

    She pointed out that another reason for women’s economic exclusion is the disparities in earnings as in almost all parts of the world, women earn less than men.

    She said a study by the DFID revealed that when the incomes of men and women with the same educational levels were compared, women at every educational level earned at least 20 per cent less than their male counterparts and men with less education in some cases earn more than more educated female peers.

     

  • Multiple shares scams: SEC reviews Sterling Registrars’ appeal

    • Lifts suspension on operation

    Securities and Exchange Commission (SEC) is considering an appeal by Sterling Registrars Limited over the decision of the Administrative Proceedings Committee (APC) to withdraw the share registration company’s operating licence over multiple shares frauds.

    APC, the internal adjudicatory arm of SEC, had withdrawn the licences of Sterling Registrars Limited and Vicad Securities Limited and banned nine capital market operators and directors in a judgment that indicated the companies and the persons engaged in multiple shares frauds.

    A source said Sterling Registrars has filed the appeal with the board of SEC. The board of SEC, according to the source, is considering the appeal.

    Under the adjudicatory process, if the appeal to the board of SEC fails, Sterling Registrars can file an appeal to the Investment and Securities Tribunal (IST) and subsequently to the Court of Appeal.

    The source said that in view of the appeal, SEC has removed suspension on the operating account of the company, paving the way for it to commence operations.

    Also, Sterling Registrars has launched an aggressive crisis management plan to assure its clients about the chances of its appeal and plead with them to retain their share registers with the company.

    One of the corporate clients of Sterling Registrars confirmed that the share registration company has made a representation to it on the ongoing efforts to overturn the withdrawal of licence. The corporate client indicated that the share registration company has also stated that it would be able to handle shareholders’ registers for the meantime pending the full decision on its appeal.

    In cases that evoked the ghosts of the fraudulent practices that were alleged to have contributed to 2008 crash of the stock market, the APC had decided that Sterling Registrars and its staff colluded and allotted shares of Japaul, which were not paid for, to unregistered and fictitious names and subsequently issued cheques for “return money” to some related fictitious names and the cheques were cleared by a staff of Sterling Registrar through the connivance of a staff and account of Quantum Securities.

    In the second case, APC decided that Vicad Securities Limited, which was registered as corporate investment adviser, engaged in fraudulent practices by refusing to honour transaction agreement after collecting N18 million while Resort Savings & Loans engaged in illegal share issue.

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    The judgments in the two cases- SEC vs Sterling Registrars and six others; and SEC vs Vicad Securities Limited and 16 others, were obtained by The Nation.

    In the course of investigations of the case involving Sterling Registrars, the fact emerged that during the initial public offer of Japaul, which opened on September 24, 2007 and closed on October 31, 2007, Sterling Registrar, which acted as registrars to the IPO, was used by a staff-Omodele Teluwo to allot 1.42 million shares to fictitious companies names after the close of the offer. One of the fictitious companies, Kalstead Farms Investment Ltd was only subsequently registered on June 25, 2008.

    According to the findings, none of the aforementioned fictitious companies used by a staff of Sterling Registrars to apply for the shares was listed in the allotment proposal submitted and cleared by Commission. A total of 1.92 million shares were allotted to Kalstead Farms Investment Ltd, which Kalstead did not pay for.

    Sterling Registrars was also discovered to have issued “return money” warrants for the sum of N445, 867.71 in favour of Mr. Akin Ekundayo and N791, 447. 32 in favour of one Aina Folashade Ojuolaope respectively whereas Mr. Akin Ekundayo applied for 20,000 units of Japaul Oil and was fully allotted and thus was not entitled to any “return money” There was no evidence to show that Aina Folashade Ojuolape subscribed for Japaul , thus warranting the issuing to her of the “return money” warrant.

    The “return money” warrants were not forwarded to the recipients but paid into the account of Quantum Securities Ltd by Omodele Teluwo with the connivance of one Ganiyu Akeem of Quantum Securities. They subsequently cleared the return money warrants.

    The APC decided that Sterling Registrars and all other respondents engaged in acts capable of adversely affecting the investing public’s image of and confidence in the capital market. It thus ordered Sterling Registrars to pay a fine of N5 million and a further sum of N5,000 only per day from the day the illegal allotment was made- May 6, 2008) to the date of decision hereof, for its unprofessional conduct and breach of the provisions of Investments and Securities Act (ISA) 2007 and SEC Rules and Regulations made pursuant thereto. It also cancelled the registration of Sterling Registrars.

    Teluwo and Ganiyu were banned for capital market activities 20 years for masterminding and conniving on the shares scam. SEC also blacklisted Kalstead and its chairman-Kayode Teluwo for collusion.

    In the case of Vicad, in addition to the withdrawal of Vicad’s licence, SEC directed the firm to pay a fine of N1 million and a further sum of N5,000 per day from January 21, 2010 up till August 25, 2011. It banned four directors and staff of Vicad for 15 years from engaging in capital market activities and holding directorship in any Nigerian public company for their unprofessional conduct in the transaction.

    The APC also suspended Resort Securities & Trust Limited suspended from taking on new assignments as stockbroker to an offer until it shows evidence of training of its staff who were indicted for negligence.

    Resort Savings and Loans Plc was directed to pay a fine of N1 million and a further sum of N5,000 per day from February 4, 2008 to October 28, 2009 for offering unregistered securities to the public.

    SEC also banned three directors of Resort Savings and Loans including Mr Adeforati Francis, Mr Olayinka Abimbola and Adegbaju Solomon for 15 years from engaging in capital market activities for their unprofessional conduct in the transaction and holding any directorship position in any Nigerian public company during the period of the ban.

  • SEC alerts on illegal operator

    SEC alerts on illegal operator

    Securities and Exchange Commission (SEC) has alerted the investing public about the activities of a company, which has been engaging in illegal capital market activities.

    In a circular, the apex capital market regulator cautioned the public “that one Dr. David Torty and TMA Consulting Group are not registered by the Commission to carry out any capital market activity.”

    According to SEC, the illegal operator, which operates from Owerri, Imo State, has been carrying on capital market activities illegally, through TMA Consulting Group.

    “The public is by this notice advised not to transact any capital market business with the said David Torty,” SEC warned.

    It urged investors wishing to invest in the capital market to transact through bona fide operators registered with the capital market regulators noting that information on registered operators is available on the regulators’ website.

    It should be recalled that SEC had earlier sealed up the offices of a number of illegal fund managers in Jos, Port Harcourt, Sokoto and Lagos. The apex regulator of the capital market has also sanctioned some operators in the capital market in line with the zero tolerance policy for improper behavior in the Nigerian capital market.

    The closed illegal operators included Women-In-Oil, an illegal fund manager and Ponzi Scheme, Green Planet Association International, Bukuru and Wiscom Ventures, Jos North.

  • SEC to probe N5.2b shares fraud at MTI

    SEC to probe N5.2b shares fraud at MTI

    •Investors allege directors fritter N275m as severance pay

    Securities and Exchange Commission (SEC) is set to investigate allegations of massive financial and securities fraud at Mass Telecommunication Innovation (MTI) following the petition by investors in the company, alleging that former directors of the telecommunication infrastructure company engaged in fraudulent practices and mismanaged the finances of the company.

    The petition dated January 6 was acknowledged by the office of the director-general of SEC on January 22, 2014. A source at the apex capital market regulator indicated that the Commission will investigate the claims by the petitioners in line with its avowed commitment to market integrity.

    The source indicated that SEC will give fair hearing to all parties and will also make its final findings available to the public as it has done in recent cases.

    The petition, submitted on behalf of the aggrieved shareholders by the law firm of Punuka Attorneys and Solicitors was titled “Petition Against Five Former Directors Of Mass Telecommunication Innovation Plc (MTI Plc) Unlawful Distribution and Utilisation of the Company’s Funds Raised from the Capital Market”.

    According to the petitioners, the five former directors of the company misappropriated funds raised through the private placement and made erroneous and misleading statements to hoodwink the public.

    The former directors were Hon. Chibudom Nwuche, former chairman; Frank Kartitie, former executive vice chairman; Glen Daley, former managing director; Amunel Araya, former executive director for Finance and Administration and Gaetino Marcon, former executive director for engineering and technical services.

    The petition stated that MTI, a company incorporated in December 2001, had between March and April 2008, after obtaining the consent of the SEC, undertaken a private placement to raise funds for the purpose of implementing its business development and expansion programme, improvement in information technology infrastructure, staff development and working capital as stated in the offer document.

    According to the petitioners, N5.2 billion was raised through private placement and the firm was converted to a public limited liability company and its shares were listed on the floor of the Nigerian Stock Exchange (NSE) after a successful private placement.

    However, the aggrieved investors alleged that as soon as the funds were released to the board and management, they immediately paid themselves what they tagged “severance pay.”

    They alleged that each of the five directors took N55 million amounting to a total of N275 million but all the directors, including the non-executive directors, still remained on the board after collecting the severance pay.

    They alleged that just one year after the proceeds of the private placement were received, the company was unable to pay salaries and pay for the execution of existing contracts.

    “All the directors continued to collect salaries and allowances. Non-executive directors were not entitled to salaries. Payment of the severance pay was illegal as it ran contrary to the provisions of the law and the procedure stipulated,” the petitioners stated.

    They also alleged that the directors might have fraudulently misdirected the investing public through overstatements and understatements of the financial conditions of the company during the issue period.

    According to the petitioners, the financial details in the prospectus for the private placement were manipulated to deceive the investing public as the company has had to write off over N1 billion of overstated debts.

    “Subcontractors were owed in spite of the fact that huge sums were paid to the company by major telecom companies as advance payment. Accumulated taxes such as VAT, companies’ income tax, and withholding tax were not paid,” they alleged.

    The petitioners noted that the debts that were purportedly indicated as related to MTN Communications Limited, Etisalat Limited Airtel Nigeria Limited and Huawei Limited were hoaxes while the share premium account might also have been manipulated for more than N100 million.

    MTI has struggled since quoted on the NSE. NSE has designated MTI as a company “below listing standard (BLS) for non rendition of financial statements.

    MTI Plc prides itself as a diversified project development group offering high-performance infrastructure that assists service providers, enterprises and private sector organizations to create value and accelerate business success within the new changing African and global marketplace.

    According to its corporate information, the foundation of MTI Plc was laid with its incorporation in December 2001. It commenced operations in the year 2002 as an Information Communication and Technology (ICT) company to provide a broad spectrum of world-class telecommunication products and services. It became a publicly quoted company in March 2008 with four distinct subsidiaries.

    “Headquartered in Lagos, MTI has offices in Ghana and Nigeria, and employs approximately 192 employees. The prime objective of this uniquely positioned company is to implement infrastructure projects on a commercial format. MTI’s business is to build quality, independently owned and operated infrastructure to service Sub-Saharan African needs in telecommunication, energy, transport and sanitation on an open-access, open-book and common-user basis,” the company stated on its profile.

     

  • New listing rules take off as NSE gets SEC’s approval

    New listing rules take off as NSE gets SEC’s approval

    •To sanction firms for breach of online disclosures

    •Online submissions is mandatory  
    •Firms to retain earnings, other data on website for three years

    A new set of listing rules for companies quoted on the Nigerian Stock Exchange (NSE) has been approved by the Securities and Exchange Commission (SEC), paving the way for the NSE to implement mandatory online submission of market-related information and data for all quoted companies.

    The approved “Rules Governing the use of Issuers Portal” obtained by The Nation indicated that companies which violate main rules governing the online information-disclosure portal would be liable to a fine of 50 per cent of their annual listing fees.

    Companies would also be required to indemnify the NSE for all damages or loss it may suffer as a result of any inaccurate, misleading, false or deceptive statement contained in the information they submit to the NSE through the issuers’ portal.

    The issuers’ portal was launched on March 26, last year. It aims at enhancing transparency, trading activities, information dissemination and fair play for all stakeholders to build and grow their businesses. The council of the NSE had approved draft rules on the portal on March 28, which were subsequently subjected to stakeholders’ review and correction between April 5 and May 30. The draft rules were submitted to SEC for approval on June 4, 2013. The notation on the approved rules indicated NSE received SEC approval on January 16, this year.

    Rule 10 of the “Rules Governing the use of Issuers Portal” stipulates that the rules become effective immediately upon publication on the website of the NSE, following approval by the Commission. However, Rule 9b and 9c, which deal with sanctions relating to earnings reports, forecasts and other disclosures, will only become effective on the 1st day of January following approval of the issuers’ portal rules by SEC, implying January 1, 2015.

    According to the new rules, it’s compulsory for all quoted companies to use the issuers’ portal for submission of information to the Exchange in compliance with the listings rules, unless such information falls within an excluded category as the Exchange may in its sole discretion prescribe from time to time.

    The rules designate the issuers’ portal as the single gateway for filing all periodic and structured and continuous disclosures. The draft described periodic and structured disclosures to include audited and unaudited financial statements, earnings forecast and corporate actions. Continuous disclosures were described as notifications of material information including notice of annual general meeting, notice of board meeting, notice of change of auditors, notice of change of company secretary, notice of change of name and registered address, notice of change of registrars, notice of completion board meeting, notice of court ordered meeting, notice of directors dealings, notice of extra-ordinary general meeting and notice of resignation and appointment of directors.

    Rule 8 of the draft requires companies to publish the same information on interim and audited earnings report, forecasts and corporate actions that it submitted to the issuers’ portal on its corporate website not later than the close of business on the day after the company submits such information to the online portal. Besides, the rule mandates companies to ensure that such information remains on their corporate websites for a period of three years from the date it is posted thereon.

    Any company that fails to comply with rule 8 would be liable to a fine of 50 per cent of its annual listing fee.

    Also, any company that fails to submit its periodic and structured information as well as continuous disclosures through the issuers’ portal would be liable to pay a fine of 50 per cent of its annual listing fee.

    According to the rule 2 on accounting standard, all periodic and structured disclosures to be submitted through the issuers’ portal “shall be prepared using the accounting policies and methods that comply with International Financial Reporting Standards (IFRS) and other accounting standards set forth by the Financial Reporting Council of Nigeria and contain the information required by the Exchange.”

    The rules require every company to appoint and duly notify the NSE of a designated user, who will be the sole authorized user for posting of information to the issuers’ portal. Every company or issuer is required to exercise all reasonable care to ensure that any information it submits through the issuers’ portal is accurate, not misleading, false or deceptive and does not omit any material facts likely to affect the import of such information.

    The rules also specify the formats for information disclosures and require all companies or issuing entities to comply with such formats.

    In the event of any misleading, false or deceptive disclosure or omission of any material fact as well as dereliction in terms of rules governing designated user and failure to comply with stipulated format, the company or issuer shall be liable to pay 50 per cent of its annual listing fee as a fine.