SEC’s prosecution of 260 market operators, a futile exercise – Shareholders
BY PETER EGWUATU
…Says IST toothless bulldog
Shareholders of quoted companies across the country have lamented that the decision by the Securities and Exchange Commission (SEC) to drag 260 market operators to the Investment and Securities Tribunal (IST) for several infractions has not yielded any positive result as retail investors’ apathy in the stock market has persisted.
This is in spite of numerous other measures taken by regulators to restore confidence in the market. The shareholders attributed the apathy to lack of confidence occasioned by the regulators reluctance to discipline erring operators, coupled with the slow pace in the dispensation of cases before the Tribunal, even as they called on the federal government to either scrap IST and establish a financial crime court or increase the power of IST to jail and confiscate properties of erring operators.
In his comment to Vanguard, Dr. Faruk Umar, Chairman, Advancement for Rights of Nigerian Shareholders, said, “IST is not the best court to adjudicate cases on capital market activities because they don’t have power to jail and confiscate property of people found guilty.
“IST is like a toothless bulldog. So, in that case, we call on the federal government to scrap it and set up a financial crimes court that will have the power to jail and confiscate property. Alternatively, the government can increase the power of IST to jail and confiscate property of erring operators and its judgment on cases should be final without any appeal because of its specialized nature.”
Continuing, he said, “ In the present situation where people appeal cases already pronounced upon by IST in ordinary court , it makes no sense because such cases will remain there for more than seven or eight years without being resolved, and the market activity is a daily transaction, how will aggrieved investors wait for such a long time when the market itself is dynamic.
So, this is one of the reasons drawing back some investors who had lost money from the market, since their hope of being restituted has not materialized.”
In the same manner, Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria (PSAN), said, “Both the Nigerian Stock Exchange (NSE) and IST have not been able to bring the erring operators to book. Some of the retail investors are complaining that some stockbrokers who collected their money to buy shares on their behalf are yet to return the money and for the operators who were dragged to IST, nothing has come out of it.”
To this extent, Okezie, called on SEC to enhance its enforcement unit to ensure that investors are protected by monitoring those cases before IST and seeing to their logical conclusion.
“It is by doing this that confidence will begin to return to the market. What happened is that SEC abandoned those cases mid way, otherwise most of them would have been completed because the law gave IST 90 days to complete cases before it,” Okezie enthused.
Mr. Adebayo Adeleke, National Secretary, Independent Shareholders Association of Nigeria, (ISAN) is of the opinion that IST has been trying its best.
According to him, “There have been low activities in the market not necessarily because of slow pace in the dispensation of cases before IST.
“There might be low publicity in terms of cases concluded by IST, but they are working, given their challenges and constraints. IST is a statutory body set up to address cases involving capital market transactions and has 90 days to complete any case, so I think the Tribunal is doing the much it can. Some of the reasons why retail investors have refused to come to the market is the losses they made in the past.
Most of them lost their life saving money and you expect them to come to the market soonest, no! The institutional investors are playing the market now because they are using other people’s funds to invest. They say once beaten twice shy, so retail investors are taking their time and they will play the market as soon as they are convinced things have normalized. They are in wait and see attitudes.”
Meanwhile, spokes person for the IST, Mr. Kenneth Ezea, while responding to some of the issues affecting IST, said that those cases that were referred to the Tribunal by the Commission are either concluded or at various stages of conclusion.
According to him, “ If there are any particular case you want to know something about please specify. You are aware that the 3rd Tribunal was sworn in on June 3 and they have since swung into action. One of the cases they have handled in your category of 260 cases is case no: IST/OA/25/2010; SEC vs. Finbank Plc and 37 others which was recently struck out for lack of diligent prosecution by SEC.”
On the issue of alleged corruption, Ezea said, “ IST is not corrupt. Did you hear of any money given to IST that was found missing or misapplied? Did anybody complain to you that he paid bribe to obtain justice from IST? If you have any such complaints please forward them for us to deal with.”
Continuing, he said, “In fact, we have many problems including lack of our own head office building leading to high rent and poor accommodation for staff and lack of courtrooms. We have only one courtroom in Abuja when we should have up to three. Our annual budget allocation is always very low, so we can’t fund most things especially publicity. We have been crying for government to support us.”