Lagos, February 23, 2011

The Lagos High Court (2) this morning heard the case of a breach of contract instituted by AdonaiNet Nigeria, owners and operators of the Trade Alert against the management of the Nigerian Stock Exchange (NSE).

Justice (Mrs) Ayo Phillips today asked the NSE/CSCS and Adonai Net Nigeria to head to the National Arbitration Court in Abuja to decide on the lawsuit instituted by Adonai Net, the developer and operator of the anti-securities fraud system, known as Trade Alert.

During the hearing, solicitors to the NSE, Charles Edosowa of the Ekikalo Chambers presented a jointly-signed written consent to the court, agreeing to proceed with Adonai Net Nigeria to the Arbitration Court.

It will be recalled that AdonaiNet Nigeria had agreed to the Arbitration process since December 2010 whilst the NSE had objective to same before eventually agreeing to the same process today.

AdonaiNet Nigeria Limited, the Trade Alert inventor and sole-financer six years ago is challenging the decision of the NSE to terminate the existing 25 year agreement signed under the recently sacked administration. The decision to go to court was informed by the unacceptable terms of the new offer made to the plaintiff by the NSE which sought to take-over 75% of the monthly revenues of the Trade Alert or, in the alternative, to effect a sale of transactions data to Adonai Net.

Background

The system was approved by the SEC on March 01, 2005 under the leadership of Musa Al-Faki to tackle the rampant incidences of broker/client unauthorized sale of shares. The total market capitalization as at March 2005 stood at NGN2.0trillion.

The owners of AdonaiNet, whose operation was approved by the Securities & Exchange Commission (SEC) six years ago as an investor protection scheme, along with the electronic bonus, biometrics and e-IPOs (Initial Public Offerings), are also filing contempt proceedings before Justice Phillips. This followed the failure of the defendants to maintain the status quo as ordered by the court when the case came up last December.

The plaintiffs, had on January 26, 2011, written the Managing Director, CSCS Limited requesting him to effect payments for services rendered so as to enable it meet obligations to consultants and other stakeholders in the trade alert value chain.

AdonaiNet in the letter signed by Dr. G.T. Alli-Balogun, its managing director and copied to the NSE Interim Administrator recalled “that all brokers, by regulation and convention, routinely remit the Trade Alert commission emanating from their transactions to the CSCS, by the 15th of every month for onward transmission to our organisation, after the CSCS has deducted its agreement charges, C.O.T and management fees.”

AdonaiNet had argued that the NSE/CSCS never conceptualise trade alert, nor fund its research. Indeed the NSE did not contribute to the software acquisition, and was not involved financially in the purchase of hardware or the six-month free trial period for all investors, do not pay consultants, is not involved in software and hardware upgrade. So it has not right to demand for any shareholding.

Possible Contempt Case Arising

Proshare NI understands that there could be a possible contempt case filed against Mr. Emmanuel Ikhazoboh for flouting the decision of the NSE to withhold the monies due to the plaintiff Messrs AdonaiNet Nigeria; after it had deducted its own commissions from the payments forwarded to it from the CSCS.

This was against the position reached by the Justice Phillips order of December 2010 asking all parties to maintain the status quo pending the determination of the substantive issue brought before the courts.

The Demutualisation Project Angle

It has been rife in informed quarters that the move against AdonaiNet relates to the desire of the NSE/SEC to ensure that all loose ends in terms of ownership of all NSE related activities were tidied up before the resumption of the new NSE DG/CEO.

It would therefore stand to reason that resolving this issue would ensure that the NSE is able to proceed with the planned demutualisation in an unfettered state when the new helmsman resumes albeit with the encumbrance of litigations and issues related to complete control of the NSE subsidiaries and affiliated operations.

No date has yet been confirmed for the arbitration meeting.

Source: Proshare