By Peter OBIORA investadvocate

Feb 15 2011 16.30 GMT 

Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) has inaugurated a new investigative panel to help deal with Capital Market infractions.

 

A Source (name withheld) confirmed this Monday February 14 2011 to investadvocate in Lagos Nigeria.

 

According to the Source, this panel was inaugurated about two weeks ago at the NSE building Customs Street Lagos.

 

The Source said that the investigative panel was set up to help deal with issues relating to Market infractions by Dealing Member firms at the Nation’s Stock Exchange and to also help in complementing the efforts of the chartered Institute of Stockbrokers (CIS) in this regard.

 

“There are backlog of issues relating to Market infractions and this is not good enough for our Market; therefore, this new panel had to be set up to help resolve these matters” the Source said.

 

Our Source further affirmed that the panel consists of a nine man member taken from the NSE, Central Securities Clearing System (CSCS), Stockbrokers, a representative of investors and Institute of Capital Market Registrars (ICMR).

 

According to our Source, cases before the panel and investigations would be forwarded to the Council of the Exchange for ratification and would be dispensed in a speedy manner.

 

At its 49^th Annual General Meeting (AGM) held Tuesday November 23 2010 at the Stock Exchange House in Lagos Nigeria, the Nigeria’s Exchange said that complaints/infractions brought before it, a total number of 249 unresolved complaints were brought forward from year 2008.

 

This the Exchange affirmed were mainly from inactive Dealing Member firms. While in year 2009, a total of 374 complaints were received against Dealing Members. Out of which 268 complaints were resolved; while 106 are still being investigated pending resolution.

 

According to Ballama Manu, Interim President of the Nigeria’s Exchange, it was observed that complaints received during the period under review border mainly on unauthorised sale of shares and failure to remit sale proceeds.

 

“This was attributed to illiquidity suffered by majority of Dealing Member firms coupled with desperation of Banks to recoup the outstanding margin facilities” Manu said.

 

The NSE’s Interim President further affirmed that it was observed that majority of the Dealing Member firms do not comply with Article 102 of the Rules and Regulations Governing Dealing Members-Know Your Client (KYC). “This has often resulted in fraudulent sales of shares to persons who are not the real owners of the shares” he said.

However, as at the time of filling in this report, our Source said that no new case has come before the new panel; as they are making efforts to resolve the backlog of cases previously reported to the Nigeria’s Exchange.