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SEC suspends trading on Afroil, Capital Oil shares

Category: Capital Market

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SEC suspends trading on Afroil, Capital Oil shares

March 19, 2008


The Securities and Exchange Commission has ordered the indefinite suspension of trading in the shares of Afroil Plc and Capital Oil Plc on the floor of the Nigerian Stock Exchange.


According to a statement by the Head of Media, SEC, Mr. Lanre Oloyi, on Wednesday, the decision is a fallout of investigations into the activities of six companies over alleged price manipulation.


He said the commission took the decision with a view to protecting the investing public.Oloyi said, “All stockbrokers are directed not to deal in the shares of these two companies.


“The commission has declared that the basis for continued trading and rise in the prices of their shares on the NSE no longer exists and the investing public must not be deceived. 


The commission had on February 15, said it was investigating the price movement.


It had vowed to punish any company involved in insider dealing.


For Afroil, the commission explained that it accessed the capital market in 1993 through an initial public offer, which was under subscribed by 42.26 per cent or 69.73 million shares, kept for subsequent disposal on the NSE.


SEC alleged that its investigations revealed that between 2001 and 2006, the company was wound up by a Federal High Court order, dated March 30, 2001, over its inability to pay its debts, pursuant to the provisions of the Companies and Allied Matters Act 1990.


It said the company did not notify the commission and the public of the development, while its shares remained quoted on the NSE and transactions were going on the shares.


Oloyi explained, “By the winding up order, its shares should have been de-listed from the official list of the NSE and the commission could not establish any basis for the steady rise in the company’s share price.


“The action of the management of Afroil Plc was an act of insider dealing and price manipulation, and therefore, a breach of Rule 110 of the commission’s rules and regulations. 


For Capital Oil, the commission said it found out that what drove the volume of transactions in the company’s shares was the sale by Five Star Asset Management Limited, of 38,708,520 shares of the company on the NSE to APT Securities Limited.


However, SEC noted that the Chairman of Capital Oil, Mr. Ayo Fanimokun, also sold 8.25 million of his holding within the same period.


“In view of the fact that the Chairman of the company was an insider, he was quite in the picture of the company’s situation, and in fact, knew that the prevailing share price was without rational basis and therefore, unsustainable when he went ahead to sell his holding,  Oloyi added.

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