The Securities and Exchange Commission (SEC) and Nigerian Exchange (NGX) have blacklisted 20 directors from participating in capital market activities over inappropriate shares dealings.
The latest update of the capital market ‘Blacklist’ obtained yesterday showed that the directors were added in the latest wave of crackdowns on capital market infractions.
The ‘Blacklist’ is an official record of all corrupt persons and indicted officials who are deemed unfit to engage in stock market activities.
It was opened after the 2018 amendment of the NGX rules, which enabled it to open a formal record to be known as “blacklist” for the purpose of records of corrupt persons. The amendment was approved by the SEC in December 2018.
The ‘Blacklist’ draws concurrence from investigations and disciplinary actions by both SEC and NGX, which are by virtues of extant laws and rules mandated to maintain the orderliness of the Nigerian capital market.
The affected directors included directors of four stockbroking firms – Amyn Investment Limited, Cashcraft Securities Limited, Mutual Alliance Investment and Securities Limited and Quantum Securities Limited. All the directors have been placed on a 10-year ban till 2031.
Sources said the blacklisted firms and their directors were indicted for capital market infractions, including unauthorised sales of clients’ shares, engaging in phony investment schemes, misrepresentation, non-remittance of clients’ sale proceeds and sundry acts capable of adversely affecting the image of the capital market and investors’ confidence.
With the blacklist, the indicted persons will not be able to work in any stockbroking and investment firms in Nigeria, as well as holding any position in any capital market-related institutions, including publicly quoted companies and unlisted firms regulated by SEC.
Under the rule known as “Specific Actions Requiring Prior Consent of The Exchange”, a dealing member shall not be allowed to employ some categories of persons without the prior written consent of the Exchange.
These included directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the NGX or SEC.
Others included any person who was an officer or employee of a dealing member expelled from the Exchange, any person expelled, as an authorised clerk or its equivalent, from any other exchange, any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership, any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty
The indicted persons may also not be able to practice or operate in any country or jurisdiction where Nigeria has a subsisting Memorandum of Understanding (MoU) on capital market cooperation.
The “blacklist” contains persons who were blacklisted for various crimes ranging from unauthorised sale of client’s shares, diversion of funds, professional misconduct and aiding and abetting criminal activities.
Those on the “blacklist” include stockbrokers, accountants, directors, compliance officers, registrar and information and technology specialists among others.
To be added to the “blacklist”, the Exchange must have established a prima facie case and indicted such persons. Any blacklisted person shall no longer be entitled to privileges, services, recognition or access to the Exchange and its facilities. Such a person also shall not be permitted to deal or transact with or be employed by a dealing member or person.
The “blacklist” rule applies to all dealing member, an authorised clerk, an employee or director of a dealing member, a sub-broker, or any other capital market operator.
According to the rules, any person blacklisted by the Exchange may however apply to the Exchange for reinstatement after the expiration of the blacklisting period imposed by the Exchange; or where the blacklisting is not for life, a reasonable period has elapsed where no period is specified by the Exchange.
Any person applying for removal from the blacklisting and reinstatement into the capital market must “provide compelling reasons” in support of his or her application.
The “Blacklist” was meant to strengthen the hands of the Exchange in its fight against unauthorised sales of investors’ shares and diversion of proceeds by capital market operators.
It was learnt that about 90 per cent of blacklisted persons were due to unauthorised sales of client’s shares.
Other ranking crime was manipulation of the market or share prices. (The Nation: Excludes headline)
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