Conflict is a natural part of human relations particularly transactional/commercial relationships

Agreements are sometimes breached, trust broken and rules and laws violated. Where there are no credible mechanisms to deal with violations and other grievances, participants will lose confidence in the system which may have unintended consequences on a country and its economy. This is more so in the Capital Market and the financial sector as a whole where trust is very central to relationships and transactions. When trust is broken, confidence in the  integrity of the market  would be lost, investors may exit and financial stability threatened. Clearly, this would have implications for capital accumulation and economic development.

It is for this among other  reasons that Capital Markets are not only guided by laws, rules, and regulations but  by strong enforcement and compliance regime which in a good number of markets are facilitated by mechanisms such as the Administrative Proceeding Committee (APC) or similar set ups . In Nigeria, the Securities and Exchange Commission (SEC APC) deals with major grievances by market participants, resolves serious disputes and issues which border on civil violation of the securities law and the rules of the Securities Commission. Besides, it is a veritable mechanism for giving fair hearing to persons suspected to have violated the securities act. We all know that the principle of fair hearing is vital to  any system of justice and the right of the populace. This is what the SEC APC seeks to achieve, among others ie giving fair hearing to a participant suspected of any violation. Also, let me stress that the SEC APC does not deliberate on criminal violations which are under the jurisdiction of the law enforcement agencies and the office of the attorney General of the Federation. All such suspected criminal violations are referred by the Commission to the appropriate authorities for necessary action and never dealt with by it.

The SEC APC is being re-launched today which implies that it is not a new committee of the Commission but is only being fine-tuned and restructured for greater effectiveness and efficiency. The APC was established in 2000 following the enactment of the Investments and Securities Act (ISA) 1999. Before 2000, the Commission had the Administrative Hearing Committee (AHC) which operated for many years and comprised only of staff of the Commission unlike the APC which has some external members and observers in its composition.

The Commission draws its powers to establish the APC from sections 303 (5) and 310 of the ISA. Section 303 (5)  specifically mandates the Commission to give fair hearing to any person in violation of the  Act or rules of the Commission before it can impose any penalty for such a violation. On the other hand, section 310 gives the Commission powers to appoint committees to enable it carry out its functions. The APC is also an important fact finding committee. It is a board committee of the Commission and its recommendations are forwarded to the board of the Commission for deliberations and confirmation.

I am glad to state that the APC had in the past taken some landmark decisions which many of you are aware of and which clearly sent signals to the market on the zero tolerance posture of the Commission on enforcement and compliance with the Securities Laws and rules. Some of its decisions lead to the institution of better corporate governance practices in some companies while suspected criminal violations were sent to the appropriate authority and saw the imprisonment of an operator. There had also been penalties ranging from suspension to banning, disgorgement and fines .

Indeed, there are several celebrated APC cases known to the public and which are available at the commission. Those who are dissatisfied with the rulings of the commission are free to appeal to the IST and many are known to have done so. This is the beauty of any legal justice system as it opens avenue for appeal up to the Supreme Court.

The re-launched APC would be chaired by the Director General and in addition to other members it has a retired judge, an academician and a capital market expert as members. Their inclusion is to boost the quality of processing of the APC. Members of the APC are also expected to adhere to the highest level of confidentiality, ethics and professionalism in their conduct. They are therefore expected to sign up to a code of ethics for APC members. I have no doubt that given the calibre of members, there will be a rebirth of the APC to further strengthen confidence and the integrity of the capital market.

 Thank you for your attention.

Source:SEC