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Financial law, regulation is designed to protect risk taker, Hon. Rabiu

By Peter Egwuatu
Hon Ahmad Rabiu , Member, Investments & Securities Tribunal (IST) has said taking positions in the financial markets involves risks as well as rewards, and a large part of financial law and regulation is designed to protect the risk-taker, the investor for example through disclosure obligations, selling restrictions, product regulation and the concept of fairness.

Rabiu, who spoke to chartered stockbrokers at a conference said, “Suffice to say that the import of legislation in the economic development of nation cannot be fully captured in one lecture of this nature. But permit me to lay emphasis on the role of legislation in the development of the capital market as a tool that has positively affected economic development.”

According to him “ Dispute resolution agencies are set up to ensure that activities which do not comply with legislations and rules are dealt with appropriately. In Nigeria, legislations and rules for dispute resolution in the capital market have generally been aimed at protecting the confidence of the investor and the sanctity of the capital market.”

He revealed that in 1995, the Federal Government of Nigeria set up a Panel which was headed by Chief Dennis Odife, to undertake a comprehensive review of the operations of the Nigerian capital market, in line with international best practices and standards; and to prepare the necessary framework for its further development to serve the Nigerian economy through means like the strengthening of market regulations.

He stressed that key among the recommendations and work of the panel was the drafting of the Investments and Securities Act (ISA) which was promulgated on 29th May, 1999 (ISA 1999).

According to him “ One of the far-reaching recommendations embodied in the Act was the conception and establishment of the Investments and Securities Tribunal (IST). The Act empowered the Tribunal to resolve disputes and controversies that arise by operations of the Act and rules made thereunder.

The Act established the Investment and Securities Tribunal “to exercise the jurisdiction, power and authority conferred on it by or under this Act”. The Commission however retained its power to administratively adjudicate on complaints arising from transactions in the capital market as well as breaches of the provisions of the Act and the rules made there under. Decisions of the APC in accordance with the Act are now subject to appeal to the Investments and Securities Tribunal (IST), appeals on the IST’s judgments/rulings lie to the Court of Appeal and from there to the Supreme Court.

“Under the ISA, 1999 aggrieved parties could take their matters directly to the Tribunal as originating applications without recourse to the Administrative Proceedings Committee (APC) of the SEC or of any SRO in the market. This was the position of the law until 2007 when the ISA 1999 was reviewed to take account of modern trends in the Market. Thus, the enabling law in the capital market today is the Investments & Securities Act No. 29 of 2007.”

Rabiu, emphasized that the ISA 2007 which repealed the 1999 Act  created the Investments and Securities Tribunal (IST)  as an independent specialised judicial body established to interpret and adjudicate on all capital market and investments controversies arising under the Act and the Rules and Regulations made thereunder.

“ In addition also and by virtue of the Pensions Reforms Act,2004, the Investments & Securities Tribunal (IST) is empowered to adjudicate on pensions disputes in Nigeria.

The Tribunal is a product of the government’s desire to reform the economy by reforming the capital market to respond to socio-economic needs of the people as well as attract foreign investments.

The Tribunal was established to provide a more flexible, expeditious dispute resolution system as well as conform to the worldwide trend of providing independent and dedicated adjudicatory system for specialized and technical areas like the investments and securities market” he added.

Rabiu  noted that the coming of the Tribunal has no doubt infused a lot of confidence in the Nigerian Capital Market which has witnessed impressive transformation of key market indicators over the six years it came into being.

According to him “  From a market capitalization of N940 billion in 2004, the market grew up nearly N12 trillion in 2008 prior to the global economic meltdown. Our banks which are major players in the capital market apparently had been well capitalized and the Tribunal has continued to instill new governance, ethical and structural standards in the market through its landmark judgments.

Prior to the uncovering of  the $65 billion Bernie Madoff scam by the US regulators, the Tribunal had on the request of the Securities and Exchange Commission (SEC) ordered the sealing off of the offices and freezing of the bank accounts of 45 wonder banks and ponzi schemes operating across the country without due authorization.”


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