In an unprecedented, but calculated move, the Securities and Exchange Commission (SEC) recently commenced a clampdown on the activities of a wonder bank, New Nation, with branch network spread across 32 states of the Federation including the Federal Capital Territory, (FCT).
The commission’s Acting Director, Enforcement, Eric Elujekor, described the organisation as an illegal fund manager not registered with the SEC, but is deceiving the public.
According to him, the SEC had previously sealed off some offices of the company in Port Harcourt, Kaduna and Sokoto.
According to Elujekor, “it is a company that has so many offices. When we got knowledge of what they say they want to do, we invited the person in charge to tell us what he was doing. He came here and told us that he had 21 pillars and that was the term he used. And those pillars represent a project that they intend to do and all these pillars are under a conglomerate they called New Nation.
“What he said is that at the end of the day when they are able to get people to participate in these pillars, Nigeria will be a New Nation. All the pillars are operating under different names like Women In oil which is a limited liability company on its own. Another is called Global Defender which is a limited liability company we have Grey and Strong which is also a limited liability company”.
Speaking further, he said the exercise was carried out to ensure that no activity would take place in their premises again, besides alerting the public on the need to be wary of such organisations, and not allow themselves to be deceived by scammers.
Prompting
The commission’s attention may have been called to the wonder bank by a newspaper report credited to the Presidential spokesperson that President Jonathan has not approved any scheme for the advancement of women in oil. The said approval was denounced as a scam by dubious elements just using the name of the President.
According to the commission, “by the time we got their brochure, they said that yes women should register to participate in the oil sector of the economy and people should pay N12, 000 and more. We sought to find out what the money was all about. Is it an investment? So, if people are paying that amount are they now members of this company? What is this all about? Because apart from this N12, 000 they are supposed to register again. To register is N3, 000 before you pay the N12, 000. We do not know what this collecting money from people is for.”
In November, when they were in Port Harcourt, one of the signatories said they were not collecting N12,000, but N8,000 which was for training and not investment. The issue now is that you have your brochure, you have not withdrawn this brochure or amended it to tell the people who want to be part of it that this N8, 000 which you are now charging is for training.
Arrests of Officials
In Lagos, Pamela Obioru, SEC’s Assistant Director and leader of the enforcement team, said 14 of the company’s officials had also been arrested by the police. She said the action was part of SEC’s statutory responsibilities of regulating the capital market and protecting investors.
The enforcement exercise, she added, was necessary to protect innocent investors from falling into wrong investment schemes.
“It is one of the routine exercises of the commission to clamp down on illegal investment operators in the country,” she stated.
Ms. Obioru said Section 153 of the Investment and Securities Act (ISA) prescribed that operators of such firms must obtain license and file returns to the commission.
In Bauchi, Bala Mohammed, SEC’s enforcement leader, said the nationwide clampdown followed complaints from the investing public.
“We received intelligent reports about two months ago that a company called New Nation was involved in some dubious financial transactions.
“It was gathered that the company receives money from investors with promises of high returns on investment.
“Immediately, we swooped into action and carried out surveillance.
“We discovered that the company had branches in the 36 state of the federation, including the FCT, with headquarter in Port Harcourt.
“Our findings also indicated that the company was neither registered with the Central Bank of Nigeria (CBN) nor with the SEC, the two financial regulatory bodies in the country,” he said.
Mohammed said before any company can offer financial services, it must be duly registered and licensed by SEC or the CBN.
You got it wrong
Answering questions from the commission’s agents, Tina Yohanna, the Branch Senior Client Analyst of New Nation in Bauchi, said that the company owned by one Charles Dukwe, was not into financial services, but is involved in youth and women empowerment programmes.
“Our main activity here is empowerment of youth with basic computer skills to enable them earn a living in a technologically driven world.
“We carry out computer training, free-of-charge after the beneficiary obtains our application form at a cost of N1, 000,” she said.
She said that about 100 people had registered for the computer programme.
Some of the clients in Bauchi said they knew about the company and its operations through their friends.
One of the clients, Saidu Mudi, he registered because he was told that the programme was free.
“I was at home when a friend of mine came and told me that a company was training youths on computer education for free, after obtaining an application form for N1, 000.
“After submitting the form, we were told that we will be trained on computer skills for free and that those who excel will be employed by the company, while others will be given computers on loan to start a business,” he said.
Another beneficiary, Franca James, said she became interested when she was told that she would be trained on computer for free and at the end of the training would be given a computer set also for free.
In Birnin Kebbi, Kebbi State, another SEC enforcement officer, Babakura Mohammed, said the commission’s enforcement and compliance department was on a national assignment to close financial institutions that did not comply with SEC Rules 2013, as amended.
Mohammed said that the illegal operators’ target high net worth individuals and companies in various states of the federation.
One of the arrested agents, Sahabi Emmanuel, said “the company targets women in oil business, and grey and strong’’.
Emmanuel, the New Nation company client analyst in the state, said he personally lured 21 unsuspecting members of the public into the illegal scheme.
Mode
According to him, a minimum monthly deposit of N8,700 was collected from various women programmed to receive N10, 000 monthly dividends after 12 months contribution.
Also in Calabar, the Branch Manager of the illegal company, Benjamin Effiong, and an unidentified female staff of the company, were taken into custody after SEC sealed their office.
Alani Falade, leader of SEC enforcement team in Akure, advised the investing public to be wary of investment opportunities that looked “too good to be real.”
The team which confiscated the Akure branch operating equipment, after sealing the office, attributed the noticeable success profile of New Nation to poverty and covetousness.
The enforcement team leader of SEC in Kano, Abubakar Bello, said they had a court warrant from Abuja, to visit the company’s offices across Nigeria, search and seal them.
Bello told journalists in Kano that that the company was operating an illegal collective scheme where members of the public were invited to make investments.
Aminu Halilu, the Assistant Director, Legal Services of the commission, who led SEC’s team in Makurdi, also said that the exercise was carried out to protect innocent Nigerian investors.
Halilu said the commission had received complaints of illegal investment collections by the company from unsuspecting members of the public against the provisions of SEC.
Let’s meet in court
Meanwhile, Sonnie Elimihe, who claimed to be the company’s legal adviser in Lagos, vowed to challenge the commission’s actions in court.
Elimihe said New Nation’s activities were duly registered by the Corporate Affairs Commission, CAC, stressing that they were not into investment activities as alleged by SEC.
He said the company was into buying and selling of blood pressure equipment under an initiative tagged ‘Grey & Strong’ to cater for elderly people from 50 years and above, among others.
Several equipment and documents were seized at the company’s branches in the seven states while the branch managers and workers were handed over to the Police.
Elujekor therefore advised the investing public to seek and get information from the SEC offices in the zones, the SEC website (www.sec.gov.ng) or any stock broking firm nearest to them.
“If you want to make an investment in the capital market, you want to put in your money maybe with a fund manager, first of all you have to find out from SEC. you do not need to physically come to SEC to find out if these fund managers are registered by the Commission who has the power to register fund managers in the Capital Market. You can do that by going to the SEC website where you have market operators, click on it and then just enter the name of this company to find out whether it is listed as one of the registered fund managers by the Commission” he said.
Elujekor affirmed that the enforcement exercise is a message to operators that the Commission has zero tolerance for illegal operators adding that anytime SEC receives information on their activities, it would not hesitate to seal off their premises and hand over the operators to the relevant authorities for prosecution.
“Anytime we hear that you are doing this and that you have a place where you are operating from, we are going to close that office. Actually there are about two sides to it, we have violations of our rules which could be civil and if it is a civil issue, the SEC takes it up. It could be a violation of the law that makes it criminal. If it is criminal, the police authorities will take it up from there, investigate and then prosecute. We do not have powers to prosecute criminal matters.
“Normally if we are going after an illegal operator in terms of a fund manager that is not registered by the Commission to carry out fund management, a wonder bank so to speak, it is at the office of such wonder bank that we do so. Again, they do not have more than one or two offices in the past. But from what we have discovered so far, we found that this particular company has offices in all the 36 states of the federation and the FCT. Before now, the sealing off operations had taken place in the headquarters in Port Harcourt, in Kaduna and then in Sokoto” he stated.
What happens next
Elujekpr disclosed that the intention of the exercise is to ensure that the offices or premises would be sealed-off and no activity would take place there and to actually inform the general public that they should stop patronizing the company.
He said from experience, so many people have lost money to people who have come out to say they can double their money. The strategy is that if people pay in, given the amount they pay in, at the end of every quarter, they get an amount based on what they put in.
He said, “we have had a lot of complaints bordering on such promises that has not materialized and people lost their money. So the Commission being the apex regulator of investments in Nigeria especially in the capital market, we want to make sure that people do not part with their hard earned money to scammers.
He warned Nigerians that if they want to make an investment in the capital market, they want to put in their money maybe with a fund manager, first of all they have to find out from SEC. this can be done in several ways as they do not need to physically come to SEC to find out if these fund managers are registered by the Commission who has the power to register fund managers in the Capital Market.
This he said can be done by going to the SEC website, click on market operators, and then just enter the name of the company to find out whether it is listed as one of the registered fund managers by the Commission.
“If it is a firm that says it is into stock broking that can buy shares for you, do the same thing. Or if you know any stock exchange that is nearest to you because we have the floors if the Nigeria Stock Exchange in many cities in Nigeria, you got here, the Stock Brokers are their members. Ask them of the company and check if it is registered or not. That is the first thing to do. If it is registered, good.
“Then the fund managers, if he says he has so and so product or Annuity Scheme and you are telling us that this is a particular fund, an investor may put in his money, they will tell you whatever will be your Return On Investment, then you have to find out from SEC because a fund manager if he wants to operate a particular type of fund, must register it to enable investors invest in it.
According to the SEC Director, “you have many funds like what is called equity fund, a company can say they want to promote an equity fund. Equity fund means that the amount of money collected from members of the public will be used in buying the shares of companies on behalf of these people; it is called a Collective Investment Scheme. It is bought from different companies, or they tell you that they are going into money market.
“If it is money market, money market means that they are buying federal government bonds, treasury bills that are money market. For you to have such a fund in place for people to come and invest, you must register that fund”.
Why Nigerians fall for their tricks
Elujekor believes that Nigerians still fall for the tricks of these operators because they are too gullible and everyone everybody wants quick money.
He said that the fact that times are hard does not help matters as when somebody is told that his money can be doubled in six months, he finds it difficult to resist it because he actually needs the money to attend to one or two things.
Zero tolerance
He said SEC is sending out a very strong message to operators that it has zero tolerance for activities that do not meet stipulated regulations. “Anytime we hear that you are doing this and that you have a place where you are operating from, we are going to close that office. Actually there are about two sides to it, we have violations of our rules which could be civil and if it is a civil issue, the SEC takes it up.
“It could be a violation of the law that makes it criminal. If it is criminal, the police authorities will take it up from there, investigate and then prosecute. We do not have powers to prosecute criminal matters” he said.
It would be recalled that the Commission sealed off the premises of Women in Oil in 2013 following a newspaper report that President Jonathan has not approved any Scheme for the advancement of women in oil.
Source: Daily Independent (by Kingsley Ighomwenghian/Deputy Editor )
