SEC takes capital market operators to police, EFCC


February 27, 2012

THE Securities and Exchange Commission (SEC) has referred 11 capital market operators to the police and the Economic and Financial Crimes Commission (EFCC) over alleged criminal transactions.

According to SEC, the police will prosecute nine of the cases while EFCC is expected to handle two others.

Presenting details on SEC’s ongoing efforts to reform the capital market at the weekend in Kenya, the Director-General of the commission, Arunma Oteh, assured local and international investors of adequate protection.

She also pledged the resolve of the commission to investigate all complaints and apply sanctions or facilitate prosecution where necessary.                 .

The SEC boss disclosed that in 2011, 1,393 complaints were handled, adding that 729 or 52 per cent were new complaints and 664 or 48 per cent were complaints brought forward from 2010.                  

She added that a total of 709 complaints or 51 per cent were resolved and closed from the 1,393 complaints while 156 complaints or 11 per cent were transferred to the enforcement action leaving an outstanding of 528 complaints or 38 per cent as at December 31, 2011.

Within the period under review, 20 operators, according to the commission were suspended from the capital market for misconduct such as unauthorised sale of shares, non-payment of proceeds of sale, non-licensing as a dealing member of the Nigerian Stock Exchange (NSE) and non-payment of dividend bonuses.

While presenting Nigeria’s country report at the 28th edition of the International Organisation of Securities Commission –Africa and Middle East Regional Committee (IOSCO-AMERC) - which ended at the weekend, Oteh said the Investments and Securities Tribunal (IST) also declared 28 operators illegal and directed SEC and the Central Bank of Nigeria (CBN) to take custody of their bank balances with a view to settling depositors.

In 2011, according to the report, SEC registered 10 shelf bond issuance programmes of six corporate and four sub-nationals worth N319 billion ($2.04 billion) for the Asset Management Corporation of Nigeria (AMCON) to buy Non-Performing Loans (NPLs) of banks.

“On the whole, the number and value of new issues floated during the year stood at 28 and N315.83 billion ($2.02 billion).  This also includes the cash portion of AMCON bonds. The Debt Management Office, on behalf of the Federal Government, also auctioned 28 bonds worth N791.27 billion ($5.07 billion.)

“In addition, during the period under review, 24 companies rewarded their shareholders with bonuses issues while the existing shares of 14 other companies were registered. The commission also cleared allotment proposal of 18 executed offers.              .

“The sustained recovery in 2011 was mitigated by such factors as investors’ apathy, hike in money market rates and of course, the relapse in the economies of some European countries and the United States of America, among others”, said the report.                   .

Meanwhile, the South African delegation explained that the country has legislated to prohibit three forms of market abuse, namely insider trading, prohibited trading  (market manipulation) and the publication of false, misleading or deceptive statement relating to listed companies (false reporting).

The South African’s country’s report explained that in the last 11 years, the Directorate of Market Abuse (DMA) put in substantial effort to enforce the anti-market abuse legislation.

“The primary enforcement tool utilised by the DMA is the referral of offenders to the Financial Service Board (FSB) enforcement committee.              .

“This is an administrative tribunal with the powers to impose unlimited administrative penalties, compensation orders and cost orders.                  .

“The DMA has obtained penalties against offenders in excess of R70million during the last 11 years. In a few instances, the prosecuting authorities had successful criminal prosecution relating to insider trading and price manipulation as well.”

Oteh, who is also the chairman of Africa and Middle East Regional Committee (AMERC) emphasised benefits of regional co-operation among members.

Source: Guardian


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