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We will name and shame fraudulent operators, SEC Ag DG

By Peter Egwuatu and Michael Eboh
The Securities and Exchange Commission has (SEC) yesterday announced its resolve to, henceforth, name individuals or firms engaged in infractions in the capital market and ensure that the full weight of the law is brought to bear on any culprits.

This is coming after the various  infractions in the capital market, especially the alleged share price manipulation saga of African Petroleum AP Plc, Afroil Plc etc, a situation which almost marred the chances of Alhaji Aliko Dangote of becoming the President of the Nigerian Stock Exchange (NSE) and saw the suspension of Nova Securities and its Chief Executive Officer and his subsequent acquittal by a higher judicial body.

SEC also announced its plan to reopen the suspended recapitalisation exercise, following the erosion of the capital of market operators, as a result of the financial meltdown.

Speaking at a forum with financial journalists, Tuesday, Acting Director-General of SEC, Mrs. Daisy Ekineh disclosed that naming and meting out sanctions to perpetrators will help address the issue of fraudulent practices in the market and serve as a deterrent  to transgressions.

She further explained  that in the course of its newly introduced and intensified on and off site inspections of market operators and introduction of new rules and directives to operators, it discovered that a number of the operators have lost a substantial chunk of capital while others showed large negative shareholders’ funds.

To this end, she emphasized that the Commission has taken decision to reintroduce the recapitalisation exercise that was suspended a couple of months ago, backing it with risk based capital adequacy standards and risk based supervision.

She said, “The Commission in 2009 focused its priorities on monitoring and enforcement to ensure a safer, more transparent and efficient capital market. To achieve this, the Commission intensified efforts to improve the efficiency of market regulation and supervision as laws and rules are as efficient as their enforcement.

“This included the adoption of zero tolerance on market infractions which has reduced new cases of infractions in the market. Suspensions are usually posted on the Commission’s website. We believe that the naming and shaming is one of the most effective deterrence to rule breaches.

“Significantly, more inspections are now conducted than were previously carried out in order to closely monitor the health and operations of intermediaries. Following the inspection findings, all operators were directed to make full and immediate provisions for their impaired capital to be reflected in the October 2009 management accounts to the Commission.

“The operators have largely compiled with the directive which showed large negative shareholders’ funds in some cases. Given the findings, the Commission held a meeting with the operators on the imperative of reopening the recapitalisation/consolidation exercise which was suspended and to sensitise them on the imperative for it under the present circumstance.

“Recapitalisation is to be backed by risk based capital adequacy standards and risk based supervision which the Commission is migrating to. The objective is to create stronger institutions which would effectively and efficiently intermediate in the capital market.

Ekineh disclosed that plans have reached advance stage to introduce a trading platform that will allow the transformation of the Over-the-Counter (OTC) Bond market, allowing corporate bonds, fixed income securities and Federal Government Bonds to be traded in similar fashion as equities on the NSE.


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