Stockbrokers fear spillover as SEC investigates BGL books

Stockbrokers and jobbers who currently do deals with BGL plc, one of the top operators in the Nigerian capital market and investment banking space are caught up in a wave of anxiety, following recent intervention by the Securities and Exchange Commission (SEC) in the operations of the ‘big market operator’ which led to the suspension of its board and appointment of an interim management.

Although the regulator has not come out to specify the infractions of BGL which warranted the take-over of its management, sources close to the regulator said it is embarking on a thorough analysis of all the deals undertaken by BGL before making a public statement.

BGL group provides advisory services and products to clients, including Government, Corporations, Financial Institutions and ultra High Networth Individuals (HNIs). Its business cuts across capital markets, securities, asset management and private equity, a development which some stockbrokers said yesterday has the potential of producing a ripple effect on other client operators.

However, the action of SEC last week was as a result of the ruling of the Investment and Securities Tribunal (IST) after the company (BGL) was found to have illiquid assets that could not meet its obligation.

“It is a sensitive issue to comment on because of its implication on the health of the market. All of us are stakeholders in the market. If we are not careful the way the information is being carried, it will affect the entire market. Developments at BGL have implications on investor confidence in the market,” an operator told BusinessDay on phone yesterday.

Other respondents have called on SEC to handle the matter with care, to avoid a negative impact on the industry.

“We must do whatever we can to ensure that the market is protected from the possible effect of this development. The question we should be asking now is what can be done to ensure that this does not affect the market negatively? I wish we all knew about it before it happened. What now matters should be how to do the damage control to ensure it does not spillover to the market, considering the size of BGL in the market,” another stockbroker told BusinessDay.

But a source close to BGL said, “Very soon, everything will be sorted out. I think that in the interest of market growth, all efforts should be geared towards avoiding panic. The SEC has come up boldly to say this is the situation of things and that investors should not panic. The idea of an interim management is to authenticate what is on ground.”

However, inside sources told BusinessDay that SEC’s action which has jolted the industry, could also be attributed to issues relating to complaints on funds from the company’s deposit products; outstanding bank loans –some of which are said to have been taken over by the Asset Management Corporation of Nigeria (AMCON); and allegation of market infraction on the side of its stock broking activities; as well as significant accounting deficiencies which our source said, “only two people can tell you”.      

BGL group has before now expanded its business lines to become one of Nigeria’s most successful Financial Institutions and a very influential member of the Nigerian Stock Exchange.

Following its recent intervention, SEC has given BGL plc up till June 1, 2015 to create liquid assets that guarantee safety of investors’ money in their custody and the appointed an interim management board, headed by Oladipo Aina, an experienced stockbroker. Other members of the board are Abubakar Ambursa, Hafsat Rufai, Temitayo Siyanbola and Tonne Ladipo-Ajayi.

Iheanyi Nwachukwu