By Yakubu LAAH InvestAdvocate

Lagos (INVESTADVOCATE)-Nigeria’s Securities and Exchange Commission (SEC) Monday said it has indicted Vicad Securities Limited and sixteen (16) others for insider dealings.

According to SEC, Vicad Securities and the 16 other respondents were indicted for failure/refusal of the respondents to cross investor shares worth N18 million after receiving payments for same, market manipulation, offering of unregistered Securities; and violations of the Investments and Securities Act, 2007, SEC Rules and Regulations (as amended) and the Code Of Conduct For Capital Market Operators And Their Employees

This is coming on the heels of Administrative Proceedings Committee (APC) of SEC in the matter of the Investments and Securities Act (ISA) 2007.

below is the proceeding and decision:

APC/2/2013

In Re:

• Failure/ Refusal of the Respondents to cross investor shares worth N18million after receiving payments for same;
• Market Manipulation;
• Offering of unregistered Securities; and
• Violations of the Investments and Securities Act, 2007, SEC Rules and Regulations (as amended)  and the Code Of Conduct For Capital Market Operators And Their Employees

Between

Securities and Exchange Commission

And

Vicad Securities Ltd                                   -1^st Respondent

Mr. Victor Adamu                                           -2^nd Respondent

Mr. Ayideji Adamu                                          -3^rd Respondent

Mr. Osahon Godwin Iyoriobe                          -4^th Respondent

Mr. Madu James Ifeanyi                                  -5^th Respondent

Resort Securities & Trust Ltd                    -6^th Respondent

Mr. Nyemike .N. Ogbechie                               -7^th Respondent

Africa Prudential Registrars Plc                -8^th Respondent

(Formerly UBA Registrars Ltd)

Ms Catharine U. Nwosu                                  -9^th Respondent

Mr. Ashade Peter Oladele                                -10^th Respondent

Mr. Yahaya Mohammed Agefu                         -11^th Respondent

Mr. Ukanah Patrick Babatunde                         -12^th Respondent

Resort Savings & Loans Plc                       13^th Respondent

Mr. Adeforati Francis                                      -14^th Respondent

Mr. Olayinka Abimbola                                   -15^st Respondent

Mr. Adegbaju Solomon                                   -16^th Respondent

Mr. Chukwuocha Jideofor Obioha                     -17^th Respondent

MEMORANDUM OF FACTS 

1. The 1^st Respondent (Vicad Securities Ltd) is registered by the Commission to perform the function of Corporate Investment Adviser.

1. The 2^nd & 3^rd Respondents (Victor Adamu and Ayideji Adamu) are Directors of the 1^st Respondent.

1. The 4^th & 5^th Respondents (Osahon Godwin Iyoriobe and Madu James Ifeanyi) are Sponsored Individuals of the 1^st respondent.

1. The 6^th Respondent (Resort Securities Ltd) is registered by the Commission to perform the function of Broker/Dealer

1. The 7^th Respondent (Nyemike N. Ogbechie) is the Managing Director and sponsored individual of the 6^th Respondent.

1. The 8^th Respondent (Africa Prudential Registrars Plc) is registered by the Commission to perform the function of a Registrar

1. The 9^th – 12^th Respondents (Catharine N. Nwosu, Ashade Peter Oladele, Yahaya Mohammed Agefu and Mr. Ukanah Patrick Babatunde) are sponsored individuals of the 8^th Respondent.

1. The 13^th Respondent (Resort Savings & Loans Plc) is a Public Liability Company whose shares are quoted on the Stock Exchange and thus regulated by the Commission.

1. The 14^th – 17^th Respondents (Adeforati Francis, Olayinka Abimbola, Adegbaju Solomon, Chukwuocha Jideofor Obioha) are Directors and officers of the 13^th Respondent.

10. In April 2011 the Commission received a letter of complaint from one Okeke Nnamdi Isaac wherein he alleged that he paid N18million to a capital market operator, Emerging Capital Ltd through Lesukaa Concepts Ltd for the purchase of shares in Resort Savings and Loans Plc in 2008, but he did not hear from the company in which the said shares were purchased, as the Registrar told him he was not a shareholder.

11. Also, the Commission received copy of a letter dated April 8, 2011 from Lesukaa Concept Ltd. addressed to the Nigerian Stock Exchange wherein the company further alleged that payment was made to Emerging Capital Ltd in 2008 for the purchase of Resort Savings and Loans Plc shares valued at N18 million. The company stated that it contacted the Registrar (8^th Respondent) to know the position of its account only to discover that no shares were bought and several efforts to get a refund of its money to enable it settle Mr. Okeke Nnamdi Isaac who had been disturbing it for the money was unsuccessful.  

12. In a bid to resolve the matter, the Lagos Zonal Office of the Commission held meetings with the parties    

13. Based on the facts revealed at the meeting, the Lagos Zonal Office wrote to Emerging Capital Ltd to refund the sum of N2 million to the investor and also pay all the accrued dividends on the shares stating that it had prevailed on the investor to accept the  30, 000, 000 units of Resort Savings and Loans Plc shares crossed to it in January 2011

14. Following the refusal of Emerging Capital Ltd to fully comply with the directives in paragraph 13 above, the Lagos Zonal Office referred the matter for enforcement action. 

15. Upon the receipt of a reminder from the Commission to comply with the directives in (13), Emerging Capital Ltd in a letter dated February 27, 2012 requested a meeting with the Commission and also alleged that other direct parties to the transaction i.e. (African Prudentials Registrars now UBA Registrars) 8^th Respondent, 1^st Respondent (Vicad Securities Ltd) and 6^th Respondent (Resort Securities and Trust Ltd) were not included in the investigation conducted by Lagos Zonal Office 

16. As a result of the issues raised in paragraph 15 above, another meeting was convened on  March 15, 2012 in which the 6^th Respondent (Resort Securities & Trust Ltd) and the 8^th Respondent (UBA Registrars Ltd Now African Prudential Registrars Plc) were invited wherein the following findings were made which were communicated to the parties : 

i)       Lesukaa Concepts Ltd paid N18million to the 1^st Respondent through Emerging Capital Ltd. for the purchase of 15 million units of Resort Savings and Loans Plc shares upon listing;

ii)      The shares were to be crossed to Lesukaa’s position upon listing;

iii)    The shares were listed on 9^th November 2009;

iv)    The certificate for 660,000,000 units of Resort Savings and Loans Plc shares in favor of 1^st Respondent (Vicad Securities Ltd) was delivered to the 1^st Respondent by Resort Savings and Loans Plc on 13^th January 2010;.

v)      The certificate was first presented for verification and subsequent lodgment in 1^st Respondent CSCS account on 14^th December 2010;

vi)    The certificate was withdrawn and returned to the 6^th Respondent (Resort Securities & Trust Ltd), the same day, 14^th December 2010 without any justifiable reason or any reason at all;

vii)   Emerging Capital Ltd., the intermediary between Lesukaa Concept and 1^st Respondent wrote to the 1^st Respondent in January and May 2010 requesting it to fulfill its obligation under the arrangement which is to cross the shares paid for to Lesukaa Concept

viii)  The letter by Emerging Capital to Vicad Securities Ltd in May 2010 was four months after the 1^st Respondent (Vicad Securities) had received the share certificate and six months after the listing of Resort Savings and Loans Plc shares on the exchange.

ix)    There was unwillingness on the part of 1^st Respondent (Vicad Securities Ltd) to cross the shares to Lesukaa upon listing as agreed. This is clear from the fact that 1^st Respondent Ltd did not take concrete steps to have the shares verified and lodged until August 2010 when its Board passed a resolution for the shares to be verified and lodged in its CSCS account ( after a period of two years it received payment for the shares and seven months after it received the share certificate);

x)      Between 6^th Respondent (Resort Securities and Trust Ltd) and the 8^th Respondent, a decision was taken to withdraw the 1^st Respondent share certificate from being verified when an attempt was made to have it verified on 14^th December 2011

xi)    The share certificate was re-presented for verification in August 2011 after the Commission stepped into the matter.  

17. Further to the findings in paragraph 16 above, the Commission on  22^nd June 2012 advised Lesukaa Concept Ltd of its right to rescind the share purchase agreement and recover the N18million paid to 1^st Respondent as well as interest at CBN Monetary Policy Rate + 2% as a result of the latter’s unwillingness to cross the shares. The interest was to be calculated from 13^th February 2010 i.e. one month after 1sr Respondent received the share certificate from 8^th Respondent until the amount is fully paid 

18. In July and August 2012 Lesukaa Concept Ltd notified the Commission that it was yet to get a kobo either from the 1^st Respondent or Emerging Capital Ltd.

19. In October, 2012, following the non compliance with its directives, the Commission suspended the 1^st Respondent and its sponsored individuals from all capital market activities until the Commission receives a report on the satisfactory resolution of the matter.

20. In addition to the findings made in respect of the agreement to purchase and cross shares between Lesukaa Concept Ltd. and 1^st Respondent, the following findings were made:

(a)  The shares in question were part of shares offered to the public by the 13^th Respondent (Resort Savings and Loans Plc) without prior approval of the Commission

(b) The 660, 000, 000 units of Resort Savings and Loan Plc shares transferred were purportedly allotted to 33 shareholders namely:

Total                                                                     660, 000, 000

(c)  The 33 shareholders purportedly transferred their holdings to the 1^st Respondent Vicad Securities Ltd by completing and signing share transfer forms which were verified by the 12^th Respondent (African Prudential Registrars) between June and July 2009

21. The share transfer forms were signed in batches by four (4) persons instead of the purported 33 different shareholders. The 8^th Respondent (African Prudential Registrars) is hereby given notice to produce the share application forms signed by the 33 shareholders, the basis upon which the certificates were verified. It is also given notice to produce the original share certificates cancelled after the verification. See also the Commission’s letter dated August 25, 2011.   

In view of the above, the Respondents have been invited before the Administrative Proceedings Committee (APC) of the Commission to explain why sanctions (or further sanctions) should not be imposed on them for the violation of the provisions herein stated.

PROVISIONS OF THE INVESTMENTS AND SECURITIES ACT 2007, SEC RULES AND REGULATIONS (AS AMENDED) AND THE CODE OF CONDUCT FOR CAPITAL MARKET OPERATORS AND THEIR EMPLOYEES VIOLATED BY THE RESPONDENTS.

1. 1.   Section 75 of the Investments and Securities Act 2007 (ISA):

“No person shall without the prior approval of the Commission issue, circulate, publish, disseminate or distribute any notice, circular or advertisement to the public which:

(a)    Offers for subscription or purchase of securities in a company:

(b)   Invites subscription for or purchase of securities; or

(c)    Calls attention to –

(i)     An offer or intended offer for subscription or purchase of securities in a company;

(ii)    An invitation or intended invitation to subscription for or purchase any such securities; or

(iii)   A prospectus

1. 2.    Rule 110 of SEC Rules and Regulations.

Manipulative and deceptive devices and contrivances

“A person involved in securities trading shall not –

(a)    Employ any device, scheme or artifice to defraud or capable of defrauding any person or institution;

(b)   Make, utter or present any untrue statement of a material fact;

(c)    Omit to disclose a material fact necessary in order not to render any statement misleading in the light of the circumstances under which the statement was made;

(d)   Engage in any act, practice or course of business which operate or would operate as a fraud or deceit upon any person in connection with the purchase or sale of or dealing any security; or

(e)    Deal in the securities of a company of which he is an insider

1. 3.   Rule 43 of SEC Rules and Regulations

“All registered persons shall comply with the Commission’s Rules on orderly, fair and equitable dealings in securities and ensure that they maintain proper standards of conduct and professionalism in securities business.  They shall also comply with the code of conduct for market operators approved by the Commission and contained in Schedule IX of these Rules and Regulations (as amended)”

1. 4.     Article 1(i) & (iii) of the Code of Conduct for Capital Market Operators and Their Employees which provides thus; 

All operators –

1. shall strictly abide, at all times, by all existing Securities Laws, Rules and Regulations made thereunder;

iii.Shall not engage in any act that would adversely affect the general investing public’s image of, and confidence in, the capital market;

1. 5.     Article 2 (i) & (ii) of the Code of Conduct for Capital Market Operators and Their Employees which provides thus;

An Employee shall;

1. at all times conduct himself with integrity and display high level of professional expected of the industry;

ii.  not engage in any act that would adversely affect the general investing public’s image of, and confidence in, the capital market;

RELIEFS SOUGHT

1. A declaration that by their actions, the Respondents have engaged in acts capable of adversely affecting the investing public’s image of and confidence in the capital market.

1. An order by virtue of Rule 7 of the SEC Rules and Regulations directing the 1^st Respondent to pay a penalty of N5, 000 per day from the day it ought to have forwarded the share certificate for verification up till the day the certificate was eventually verified on August 25, 2011

1. An order by virtue of Schedule VII, Rule 11 of the Rules banning the 2^nd – 5^th Respondents as agents of the 1^st Respondent from engaging in capital market activities for a period of 10 years for the unprofessional manner with which the transaction was conducted.

1. An order by virtue of Rule 7 of the SEC Rules and Regulations directing the 6^th Respondent to pay a penalty of N5,000 per day from December 14, 2010 when the share certificate was presented for verification to August, 2011 when the certificate was verified and lodged.

1. An order by virtue of Schedule VII, Rule 11 of the Rules banning the 7^th Respondent as agents of the 6^th Respondent from engaging in capital market activities for a period of 5 years.

1. An order by virtue of Rule 7 of the SEC Rules and Regulations directing the 8^th Respondent to pay a penalty of N5,000 per day  from December 14, 2010, the date the share certificate was returned to the 1^st Respondent without just cause to the date it was finally verified on August 25, 2011.

1. An order by virtue of Schedule VII, Rule 11 of the Rules directing that the registration of the 9^th – 12^th Respondents as sponsored individuals of the 8^th Respondent be cancelled for the unprofessional manner they engaged in the transactions that led to this matter.

1. An order by virtue of Rule 7 of the SEC Rules and Regulations directing the 13^th Respondent to pay a penalty of N5,000 per day  for offering unregistered securities to the public until the date the said shares are registered by the Commission.

1. An order by virtue of Schedule VII, Rule 11 of the Rules banning the 14^th – 17^th Respondents as agents of the 13^th Respondent from holding position of director in any public company for a period of 5 years for unprofessional conduct.

10. An order by virtue of Schedule VII, Rule 11 of the Rules suspending African Prudential Registrars Plc from taking on new assignments as registrars for two years for verifying share certificates and transferring shares without due regards to satisfying itself as to the signatories.

FINDINGS

The Administrative Proceedings Committee sat on Thursday 3^rd October 2013 wherein parties to the matter made their oral and written submissions in respect of the issues raised in the Memorandum of Facts and the Respondents brief.

GENERAL FINDINGS

1. The 1^st Respondent (Vicad Securities Ltd) is registered by the Commission to perform the function of Corporate Investment Adviser.

1. The 2^nd & 3^rd Respondents (Victor Adamu and Ayideji Adamu) are Directors of the 1^st Respondent.

1. The 4^th & 5^th Respondents (Osahon Godwin Iyoriobe and Madu James Ifeanyi) are Sponsored Individuals of the 1^st Respondent.

1. The 6^th Respondent  (Resort Securities Ltd)  is registered by the Commission to perform the function of Broker/Dealer

1. The 7^th Respondent (Nyemike N. Ogbechie) is the Managing Director and sponsored individual of the 6^th Respondent.

1. The 8^th Respondent (Africa Prudential Registrars Plc, formerly UBA Registrars Ltd) is registered by the Commission to perform the function of a Registrar

1. The 9^th – 12^th Respondents (Catharine N. Nwosu, Ashade Peter Oladele, Yahaya Mohammed Agefu and Mr. Ukanah Patrick Babatunde) are sponsored individuals of the 8^th Respondent.

1. The 13^th Respondent (Resort Savings & Loans Plc) is a Public Liability Company whose shares are quoted on the Stock Exchange and thus regulated by the Commission.

1. *The 14^th – 17^th Respondents (Adeforati Francis, Olayinka Abimbola, Adegbaju Solomon, Chukwuocha Jideofor Obioha) are Directors and officers of the 13^th Respondent.

10. The 17^th Respondent as at the date of the transaction in 2008 was not a director of the 13^th Respondent.

11. In April 2011 the Commission received a letter of complaint from one Okeke Nnamdi Isaac wherein he alleged that he paid N18million to a Capital Market Operator, Emerging Capital Ltd through Lesukaa Concepts Ltd for the purchase of shares in Resort Savings and Loans Plc in 2008, but he did not hear from the company in which the said shares were purchased, as the Registrar told him he was not a shareholder.

12. Also, the Commission received copy of a letter dated April 8, 2011 from Lesukaa Concept Ltd. addressed to the Nigerian Stock Exchange wherein the company further alleged that payment was made to Emerging Capital Ltd in 2008 for the purchase of Resort Savings and Loans Plc shares valued at N18million. The company stated that it contacted the Registrar (8^th Respondent) to know the position of its account only to discover that no shares were bought and several efforts to get a refund of its money to enable it settle Mr. Okeke Nnamdi Isaac who had been disturbing it for the money was unsuccessful.  

13. The Lagos Zonal Office of the Commission held meetings with the parties and based on the facts revealed at the meeting, the Lagos Zonal Office wrote to Emerging Capital Ltd directing it to refund the sum of N2 million to the investor and also to pay all the accrued dividends on the shares stating that it had prevailed on the investor to accept the  30, 000, 000 units of Resort Savings and Loans Plc shares crossed to it in January 2011

14. Following the refusal of Emerging Capital Ltd to fully comply with the directives in paragraph 13 above, the Lagos Zonal Office referred the matter for enforcement action. 

15. Upon the receipt of a reminder from the Commission to comply with the directives in (13), Emerging Capital Ltd in a letter dated February 27, 2012 requested a meeting with the Commission and also alleged that other direct parties to the transaction i.e. 8^th Respondent (African Prudential Registrars), 1^st Respondent (Vicad Securities Ltd) and 6^th Respondent (Resort Securities and Trust Ltd.) were not included in the investigation conducted by Lagos Zonal Office 

16. As a result of the issues raised in paragraph 15 above, another meeting was convened on March 15, 2012 in which the 6^th Respondent (Resort Securities & Trust Ltd) and the 8^th Respondent (African Prudential Registrars Plc) were invited wherein the following findings were made which were communicated to the parties : 

i) Lesukaa Concepts Ltd paid N18million to the 1^st Respondent (Vicad Securities Ltd) through Emerging Capital Ltd. for the purchase of 15 million units of Resort Savings and Loans Plc shares upon listing;

ii)            The shares were to be crossed to Lesukaa’s position upon listing;

iii)          The shares were listed on 9^th November 2009;

iv)          The certificate for 660,000,000 units of Resort Savings and Loans Plc shares in favor of 1^st Respondent (Vicad Securities Ltd) was delivered to the 1^st Respondent by Resort Savings and Loans Plc on 13^th January 2010;

v)            The certificate was first presented for verification and subsequent lodgment in 1^st Respondent (Vicad’s) CSCS account on 14^th December 2010;

vi)          The certificate was withdrawn and returned to the 6^th Respondent (Resort Securities & Trust Ltd), the same day, 14^th December 2010; that the reason for withdrawal was an incomplete document;

vii)         Emerging Capital Ltd., the intermediary between Lesukaa Concept and the 1^st Respondent (Vicad Securities Ltd) wrote to 1^st Respondent in January and May 2010 requesting it to fulfill its obligation under the arrangement which was, to cross the shares paid for to Lesukaa Concept;

viii)        The letter by Emerging Capital to the 1^st Respondent in May 2010 was written four months after the 1^st Respondent had received the share certificate and six months after the listing of Resort Savings and Loans Plc shares on the exchange;

ix)          There was unwillingness on the part of the 1^st Respondent to cross the shares to Lesukaa upon listing as agreed. The 1^st Respondent did not take concrete steps to have the shares verified and lodged until August 2010 when its Board passed a resolution for the shares to be verified and lodged in its CSCS account (after a period of two years of receipt of payment for the shares and seven months after receipt of the share certificate);

x)            It was not established that between the 6^th Respondent (Resort Securities and Trust Ltd) and the 8^th Respondent (African Prudential Registrars Ltd), a decision was taken to withdraw the 1^st Respondent (Vicad Securities Ltd’s) share certificate from being verified when an attempt was made to have it verified on 14^th December 2011.

xi)          The share certificate was re-presented for verification in August 2011 after the Commission stepped into the matter.  

17. Further to the findings in paragraph 16 above, the Commission on  22^nd June 2012 advised Lesukaa Concept Ltd of its right to rescind the share purchase agreement and recover the N18 million paid to the 1^st Respondent as well as interest at CBN Monetary Policy Rate + 2% as a result of the latter’s unwillingness to cross the shares. The interest was to be calculated from 13^th February 2010 i.e. one month after the 1^st Respondent received the share certificate from African Prudential Registrars Ltd until the amount was fully paid.   

18. In July and August 2012 Lesukaa Concept Ltd notified the Commission that it was yet to get a kobo either from the 1^st Respondent (Vicad Securities Ltd) or Emerging Capital Ltd.

19. In October, 2012, following the non compliance with its directives, the Commission suspended the 1^st Respondent and its sponsored individuals from all capital market activities until the Commission receives a report on the satisfactory resolution of the matter.

20. In addition to the findings made in respect of the agreement to purchase and cross shares between Lesukaa Concept Ltd. and 1^st Respondent, the following findings were made:

1. The shares in question were part of shares offered to the public by the 13^th Respondent (Resort Savings and Loans Plc) without prior approval of the Commission

1. *The 660, 000, 000 units of Resort Savings and Loan Plc shares transferred (to 1^st Respondent) were allotted to 33 shareholders namely:

Total                                                                     660, 000, 000

1. The 33 shareholders holdings were transferred to the 1^st Respondent (Vicad Securities Ltd) by completing and signing share transfer forms which were verified by the 12^th Respondent (a staff of African Registrars Plc between June and July 2009)

21. The share transfer forms were signed in batches by four (4) persons instead of the 33 different shareholders. The 8^th Respondent (African Prudential Registrars) produced the share application forms and also produced the original share certificates cancelled after the verification. The original share certificates all bore Resort Savings & Loans Plc instead of Resort Savings & Loans Ltd.

SPECIFIC FINDINGS

ALLEGATION 1

• Failure/ Refusal of Respondents to cross investor shares worth N18 million after receiving payments for same

The 1^st – 5^th Respondent failed/ refused to cross investor’s shares worth N18million after receiving money for same violating Rule 43 of SEC Rules and Regulations and Article 1 (i), 1 (iii) and 2 (i) – (ii) of the Code of Conduct for Capital Market and their Employees.

That the 1^st Respondent (Vicad Securities Ltd) was not willing to cross the shares to its client upon listing as agreed.  This was deduced from the following factors:

(i)       The shares (Resort Savings and Loans Plc) were listed on the exchange on November 9, 2009.

(ii)      The 1^st Respondent did not take steps to verify and lodge the share certificates until August 2010 (two years after it received payment from Mr. Okeke its client)

(iii)     That it took the 1^st Respondent almost nine months before it returned the share certificate to the 6^th Respondent to re-present same to the 8th Respondent (African Prudential Registrar) for verification.

ALLEGATION 2

• Offering of Unregistered Securities

That the 13^th Respondent was a Private Liability Company at the time of the transaction and the 14th – 16^th Respondents being Directors and officers responsible for running the affairs of the 13^th Respondents violatedtheprovisions of Section 75 of the Investments and Securities Act, 2007 by offering unregistered securities to the public without the prior approval of the Commission.

That there was oral and documentary evidence before the Committee that 13^th Respondent in July 2008 while still a private limited liability company, offered its shares to the investing public without approval from the SEC. This was further buttressed by the original certificates which bore Resort Savings and Loans Plc, tendered at the hearing by the 8^th Respondent.

ALLEGATION 3

• Market Manipulation

That the 1^st –5^th Respondent and 13^th– 16^th Respondents violated the provisions of Rule 110 of SEC Rules and Regulations by engaging in manipulative and deceptive devices and contrivances.

That the 17^th Respondent was not a director at the time of the alleged infractions; that his name should therefore not have been included on the list of Respondents.

That the 13^th Respondent was given notice to provide proof of payment for shares allotted to shareholders, but failed to do so.

ALLEGATION 4

• Violations of the Investments and Securities Act, 2007, SEC Rules and Regulations (as amended)  and the Code of Conduct For Capital Market Operators And Their Employees

The 1^st Respondent, a Capital Market Operator registered by SEC, the 2^nd – 5th   Respondents being employees of the 1^st Respondent violated the provisions of Rule 43 of SEC Rules and Regulations by not observing fair and equitable dealings in securities and not maintaining proper standards of conduct and professionalism in securities business.

The 1^st Respondent, a Capital Market Operator registered by SEC, the 2^nd – 5th Respondents being employees of the 1^st Respondent violated the provisions of Article 1(i), (iii) and 2 (i) – (ii) of Code of Conduct for Capital Operators as contained in Schedule IX, SEC Rules and Regulation by not displaying a high level of professionalism expected in the capital market and engaging in acts that adversely affected the general investing public’s image of and confidence in the capital market.

The 6^th Respondent, a Capital Market Operator registered by SEC, the 2^nd – 5th   Respondents being employees of the 1^st Respondent violated the provisions of Rule 43 of SEC Rules and Regulations by not observing fair and equitable dealings in securities and not maintaining proper standards of conduct and professionalism in securities business.

The 6^th Respondent, a Capital Market Operator registered by SEC, the 7th Respondents being employees of the 1^st Respondent violated the provisions of Article 1(i), (iii) and 2 (i) – (ii) of Code of Conduct for Capital Operators as contained in Schedule IX, SEC Rules and Regulation by not displaying a high level of professionalism expected in the capital market and engaging in acts that adversely affected the general investing public’s image of and confidence in the capital market.

The 8^th Respondent, a Capital Market Operator registered by SEC, the 9th – 12th   Respondents being employees of the 1^st Respondent violated the provisions of Rule 43 of SEC Rules and Regulations by not observing fair and equitable dealings in securities and not maintaining proper standards of conduct and professionalism in securities business.

The 8^th Respondent, a Capital Market Operator registered by SEC, the 9^th – 12th Respondents being employees of the 1^st Respondent violated the provisions of Article 1(i), (iii) and 2 (i) – (ii) of Code of Conduct for Capital Operators as contained in Schedule IX, SEC Rules and Regulation by not displaying a high level of professionalism expected in the capital market and engaging in acts that adversely affected the general investing public’s image of and confidence in the capital market.

That the allegation of conspiracy was not established between the 6^th– 7^th Respondents and the 8^th– 12^th Respondent. That the 6^th and 7^th Respondents had in their evidence showed grounds for the Committee to absolve them of conspiracy in the transaction.

However, the duty of care and professionalism required that the 6^th Respondent ought to have ensured the documents were complete at the first instance before submitting them to the 8^th Respondent, and not to have forwarded incomplete documents only for same to be returned.

That the 8^th – 12^th Respondents in their submissions provided evidence that they had shown sufficient reasons why they declined to verify the 1^st Respondent’s share certificate –which was due to incomplete documentation – when it was first presented for verification on 14^th December 2010; that the certificate was verified by the 8^th Respondent in August 2011 after the 1^st Respondent had perfected the documentation process required.

However, the 8^th – 12^th Respondents failed to prove they discharged the duty of care imposed on them, having verified 33 share certificates with the accompanying transfer and Certificate Deposit forms, in different names, all bearing the same address but signed by four persons. 

 DECISIONS

Pursuant to the powers conferred on the Commission by the Investments and Securities Act, (ISA) 2007, the SEC Rules and Regulations made pursuant thereto, and for the maintenance of investors’ confidence and trust in the Capital Market, the Administrative Proceedings Committee of the Commission hereby decides and directs as follows:

1. That by their actions, the 1st – 16^th Respondents engaged in acts capable of adversely affecting the investing public’s image of and confidence in the capital market;

1. That pursuant to Section 303 of the Investment and Securities Act 2007 the 1^st Respondent be and are hereby directed to pay a fine of N1,000,000 (One million Naira) only and a further sum of N5,000 (Five thousand naira) per day from the day it ought to have forwarded the share certificate for verification(21st January 2010) up till the day the certificate was eventually verified on 25th August  2011. The share certificate was delivered to the 1^st Respondent by the 13^th Respondent on 13^th January 2010;

1. Pursuant to Schedule VII, Rule 11 of the SEC Rules and Regulations the 2^nd – 5^th Respondents be and  are hereby  banned for 15 years from engaging in Capital Market activities for their unprofessional conduct in the transaction, and are barred from holding any directorship position in a Nigerian public company during the period of the ban;

1. That the registration of the 1^st Respondent (Vicad Securities Ltd.) be and is hereby withdrawn;

5.       That the allegation of conspiracy was not established against the 6^th– 7^th     Respondents, however, having failed to discharge the duty of care imposed on them pursuant to Schedule VII, Rule 11 of the SEC Rules and Regulations, the 6^th Respondents be and is hereby directed to train its staff (including the 7^th Respondent) within six months from date of this decision in the following areas:

(i)  The use and application of modern technology in its business as Stockbrokers in the Capital Market

 (ii)    Internal Control

               (iii)  Ethics

(iv)  The Investment and Securities Act and the Rules and the Regulations made pursuant thereto

(v)   The Rules and regulations of the Nigerian Stock Exchange.

(vi)Corporate Governance including the Nigerian Code;

1. That the 6^th Respondent be and are hereby suspended from taking on new assignments (as stockbroker to an offer) until it shows evidence of compliance with the training requirements and is cleared by the Commission;

1. That the allegation of conspiracy was not established against the 8^th– 12^th     Respondents however having failed to discharge the duty of care imposed on them pursuant to Schedule VII, Rule 11 of the SEC Rules and Regulations, the 8^th Respondents be and is hereby directed to train its staff (including the 9^th – 12^th Respondents) in the following areas:

(i)   The use and application of modern technology in its business as Registrars in the Capital Market

 (ii)  Internal Control

               (iii)  Ethics

               (iv) The Investment and Securities Act and the Rules and the Regulations

          made pursuant thereto                    

               (v) The Rules and regulations of the Nigerian Stock Exchange.

               (vi) Corporate Governance including the Nigerian Code;

8.  That the 8^th Respondent be are hereby suspended from taking on new assignments      (as Registrars to an offer) until it shows evidence of compliance with the training requirements and is cleared by the Commission;

9.  That pursuant to Section 303 of the Investment and Securities Act 2007 the 13th Respondent be and are hereby directed to pay a fine of N1,000,000 (One million Naira) only and a further sum of N5,000 (Five thousand naira) per day from 4^th February 2008 to 28^th October 2009 for offering unregistered securities to the public;

10.  That pursuant to Schedule VII, Rule 11 of the SEC Rules and   Regulations the 14th – 16th Respondents be and are hereby  banned for 15 years from engaging in Capital Market activities for their unprofessional conduct in the transaction and holding any directorship position in any Nigerian public company during the period of the ban;  

11. That the 17^th Respondent was not a director of the 13^th Respondent at the time of the alleged infractions and therefore his name be and is hereby removed from the list of Respondents without prejudice;

12. That information on possible criminality in this matter be and is hereby referred to law enforcement Agencies;

 Secretary, Administrative Proceedings Committee

Source: SEC