Some shareholders on Wednesday said levying appropriate sanctions on erring stockbrokers caught engaging in sharp practices would stem the burden on the Investors Protection Fund (IPF).
They say their advocacy became imperative following the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange’s (NSE) commitment in restoring market-based confidence through the IPF.
The shareholders also said in interviews with the News Agency of Nigeria in Lagos that the market regulators should expose erring dealers engaged in sharp practices to boost investors’ confidence.
The shareholders were reacting to the N43.23 million IPF monies paid to 158 investors as a result of defalcation committed by 29 dealing member firms.
Adebayo Adeleke, national secretary, Independent Shareholders Association of Nigeria (ISAN), said market regulators should prosecute erring brokers to reduce malpractice in the market.
Adeleke said stockbrokers were responsible for the losses incurred by investors and should be punished for such, saying the regulators should embrace the name and shame approach, to minimise fraudulent practices at the nation’s bourse.
Boniface Okezie, national president, Progressive Shareholders Association of Nigeria (PSAN), called for transparency in the management of the fund, noting that the exchange should make public the names of the beneficiaries, for transparency and for investors to believe in it.
“As for now, the investment protection fund still remains a mystery because nobody is aware of it and the processes involved.
“The investing public has to know who and who benefitted so far from the fund; it is not enough to say we have been paid so much, without letting the investing public know what is really going on at the committee level,’’ Okezie said.
Shareholders needed to be carried along in decision making by the NSE and its management, he said.
It would be recalled that the NSE on August 5 announced plans to compensate 158 investors with N42.23 million, under its IPF.
The IPF is a quasi-capital market insurance scheme inaugurated in 2012 for defalcation committed by the NSE-registered dealing member firms.
The fund is also designed to compensate investors’ losses occasioned by bankruptcy, insolvency, negligence or wrongdoing of the stock-broking firms and to boost investors’ confidence in the nation’s bourse.
It addresses defalcation committed by dealing member firm directors, officers, employees or representatives, in relation to securities, money or any property in the course of its business as a dealing member firm.
The NSE in a statement said the compensation covered pecuniary losses suffered by investors’ following wrongdoing by 29 dealing member firms of the Exchange.