National Council of the Nigerian Stock Exchange (NSE) may have done much in line with its zero tolerance policy on regulatory infractions, as evidenced in increasing level of compliance by dealing members, but efforts towards resolving the pending complaints against dealing member firms will be a plus.
In 2017, the NSE carried out 267 enforcement actions, a remarkable decline from 328 recorded in 2016. Average compliance (rendition of regulatory returns) by stockbrokers increased from 76 percent in 2016 to 79 percent in 2017, while the number of rules breached stood at 11 in 2017, same as in 2016, BusinessDay checks show.
In its bid to improve investor confidence in the market, the NSE commenced a strong campaign against market infraction by its dealing members by introducing dealing members’ compliance report, BrokerTraX.
With BrokerTraX, investors can make more informed decisions about where to invest by viewing names of dealing member firms that have been found liable for contravening market rules. The goal is to reduce contravention of market rules to its barest minimum in line with the deliberate and sustained effort to restore confidence.
A closer look at the ‘BrokerTraX’ platform, however, revealed that no fewer than 13 complaints made against dealing member firms at the Exchange relating to unauthorised sale of investors’ shares and misappropriation of investors’ funds between January 2012 and January 14, 2019 are still unresolved.
The dealing member firms whose complaints are yet to be resolved, according to the NSE, are Finbank Securities & Asset Management Limited, First Stockbrokers Limited, GMT Securities and Assets Management Limited, ITIS Securities Limited, and Lion Stockbrokers Limited.
Others are Mact Securities Limited, Maven Asset Management Limited, Mutual Alliance Investments & Securities Limited, Options Securities Limited, Partnership Securities Limited, Royal Crest Securities Limited, Securities Solutions Limited, WT Securities Limited and Adonai Stockbrokers Limited.
In details, the NSE said First Stockbrokers Limited was suspended in line with Rule 11.10: Misappropriation of Clients’ Funds, of the Rule Book of The Exchange (Dealing Member’s Rules) in the sum of N 9,503,000 belonging to Edwin Okeke and for defaulting in the payment of the outstanding balance to Okeke on the first instalment in the sum of N 2,500,000 due on September 18, 2017 as directed by the Exchange. The NSE tagged this case as ‘Unresolved’ in its ‘BrokerTrax’.
The NSE said GMT Securities and Assets Management Limited is yet to restitute the concerned investors, adding, “The firm is presently inactive as a result of being under suspension due to its violation of Market Settlement Guidelines of CSCS, non-compliance with SEC’s Minimum Operating Standards and violation of Rule 7.4: Submission of Financial Reports to The Exchange, Rulebook of The Exchange, 2015 (Dealing Members’ Rules).”
According to the NSE, “ITIS Securities Limited is suspended and is before the Disciplinary Committee of Council of The Exchange. Lion Stockbrokers Limited was suspended on 16th of March, 2011 and is going through the Exchange’s disciplinary process. Mact Securities Limited is suspended and is before the National Council of The Exchange.
“Maven Asset Management Limited was sanctioned in line with Rule 11.9: Prohibition of Unauthorized Sale of Securities, Rule Book of The Exchange, 2015 (Dealing Members’ Rules) and is to restitute the complainant in full not later than 6 May 2016. Mutual Alliance Investments & Securities Limited restitution of investors’ shares is ongoing.”
Also, Options Securities Limited restitution of the investors’ shares is ongoing, according to the NSE in its BrokerTraX.
Partnership Securities Limited was suspended on October 18, 2016 in line with Rule 11.10: Misappropriation of Funds, Rule Book of The Exchange, 2015 (Dealing Members’ Rules). The complaint is still not resolved.
Royal Crest Securities Limited was suspended on March 6, 2017 for failure to resolve investors’ complaint (in line with the SEC Complaints Management Framework) on alleged unauthorised sales of shares. Securities Solutions Limited is suspended and is before the Disciplinary Committee of Council of the Exchange.
WT Securities Limited was suspended on October 31, 2011 and is going through the Exchange’s disciplinary process.
The NSE said complaints against Adonai Stockbrokers Limited are yet to be resolved, adding that the “firm was suspended on the 19th June 2018 following its violations of The Exchange’s rules including, but not limited to: Rule 11.9: Prohibition of Unauthorized Sale of Securities, Rule 11.3: Prohibited Practices, and Rule 11.8: No Unauthorized Use of Client Funds; Segregation of Client Funds, of the 2015 Rule Book of The Exchange (Dealing Members’ Rules)”.
Recall that 35 stockbroking firms were last month expelled by the Nigerian Stock Exchange. The expelled stockbroking firms are Andruche Investments Plc, Angela Eccies Limited, Associated Trust Investment and Finance Limited, Beaver Securities Limited, Betraco Securities Limited, Cobal Ventures Limited, Financial Intermediaries Limited, Corporate Focus Securities Limited, GF Securities Limited, IB Finance Limited, Integrated Securities Limited, Integrated Ventures Nigeria Limited, Intercommerce and Consultant Limited, Investment and Capital Development Company Limited, Investment Trust Company Limited, Kamrash Securities Limited, Lakeside Asset Management Limited, M and F Investment and Securities Limited, Milestone Investment and Securities Limited, Millennium Investment Trust Limited, Moji Securities and Investment Nigeria Limited, Morgan Trust Asset Management Limited (formerly known as IMB Morgan Plc/IMB Securities Limited), and Multibank International Securities Limited.
Other expelled stockbroking firms are Nationwide Finance and International Securities Limited, Novelty Investment Limited, Optimus Finance and Securities Limited, Pabod Finance and Investment Company Limited, Pabofin Securities Limited, Path Securities and Investments Limited, Shiroro Finance Limited, Tassel Finance and Investment Limited, Unique Securities and Finance Services Limited, Upper Credit Securities and Investments Limited, WellsFargo Capital Limited, and Westland Investment Limited.
Iheanyi Nwachukwu
