By Goddy Egene, 08.02.2010
Securities and Exchange Commission (SEC) is to establish a Special Protection Fund where investors who have lost money in the nation’s capital market to dubious operators would be compensated.
Special Adviser to the Director-General, SEC, Dr. Simeon Obidairo, who disclosed this in Lagos weekend, said the money to be recovered from the 360 individuals and entities being dragged to the Investment and Securities Act (IST) for alleged violation of the Investments and Securities Act (ISA), 2007, would be used as seed money for the Fund.
He noted that the Commission wants to ensure that when investors invest in the market, their funds are not stolen, stessing that all those who have stolen investors’ money in the past would be made to pay back.
According to him, one of the reliefs the Commission is seeking from the IST is that those who have used investors’ money to enrich their own pockets would be made to pay back and a special protection fund would be established for investors to get back their money.
He said that instead of excising fears that the naming and shaming tactics of the Commission would affect the market negatively, rather the market would reap more benefits on the long run.
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“The heart of SEC’s enforcement strategy is restoring investor confidence. At the minimum, this means providing credible deterrence by making sure that we use all our statutory tools to litigate market abuses to the bitter end,†he said.
Obidairo assured that there would not be sacred cows in the fight against infractions in the nation’s capital market, explaining that more names among the 260 entities and individuals dragged before the IST would be made public this week.
He said the decision to prosecute the 360 market stakeholders was an outcome of an investigation by a joint task force comprising SEC, Central Bank of Nigeria (CBN) law and accounting firms.
Obidairo disclosed that the task force, which commenced operation February 2010 interviewed 101 individuals, analysed over 150,000 pages of physical documents from sources including SEC, rescued banks, stockbrokers, registrars, issuing houses, asset managers and private individuals.
He said the task force also received electronic data spools of over 1,000 Gigabytes from the rescued banks, the Central Securities Clearing System (CSCS) and the NSE.
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Justifying the prosecution of the 360 individuals and entities last week, SEC’s Head of Media, Mr. Lanre Oloyi said that they have allegedly engaged in false trading, which is prohibited by the ISA.
Another alleged violation by these entities and individuals was the purchase or sale of securities that did not involve a change in the beneficial ownership of the securities and transactions conducted to maintain, inflate, depress or fluctuate the price of a security.
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Actions were also filed against some individuals who were alleged to have engaged in insider trading by using unpublished price sensitive information in relation to purchase or sale of securities. “The ISA 2007 prohibits the employment of any device, scheme or artifice that would operate as a fraud or deceit on any person in connection with the purchase or sale of securities. Many of the respondents were allegedly engaged in such deceptive and manipulative activities,†Oloyi said. He added that a credible enforcement programme is a key component for ensuring the fulfillment of its critical mandate of protecting the everyday investors in the Nigerian capital market.
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