Investor Protection Fund: 379 stock investors claim loss of N1.694bn

The Identity Verification Consultants (IVC) appointed by Nigerian Stock Exchange (NSE) Investor Protection Fund (IPF) Board of Trustees has verified 379 claimants, out of which the Board approved 154 claimants for payment. The actual value of loss of the 379 claimants verified by the Board is N1.694billion.

As at August 17, 2015, 23 claimants have been paid N7.282million, the highest claim before the Investor Protection Fund (IPF) is N185million; while lowest claim before the IPF is N1, 400.

According to the Nigerian Stock Exchange (NSE), total sum payable to the 154 claimants whose identities have been verified by the Identity Verification Consultants is N40.627million.

Only 81 claimants out of the total number of 154 will be paid full value of the loss of their investment; while 73 claimants will receive below full value of the loss of their investment.

NSE has further clarified that total number of 154 claimants that will receive exactly N400, 000 (that is full value of loss and below full value of loss) is 78.

“It has been a long, rigorous and transparent process getting to this stage. We researched global best practices and based on our findings, we took decisions on various issues regarding the IPF, benchmarking our processes and procedures against other international investors’ protection funds”, according to Lawrence Fubara Anga, a capital market solicitor who is the vice chairperson of the Board of Trustees of the Investor Protection Fund..

“First of all, we put in place an appropriate corporate governance structure for the Fund; we adopted Rules for the IPF and then following transparent and auditable selection processes, we appointed auditors as well as identity verification consultants. We then commenced the process of identifying claimants and verifying their claims. We must thank the claimants for their patience,” he added

The NSE IPF board insisted that the claimants were found to be eligible for compensation in accordance with the relevant provisions of the Investment and Securities Act and the Investors’ Protection Fund rules.

The losses must arise from: the revocation or cancellation of the registration of a dealing member firm by the Securities and Exchange Commission (SEC); the insolvency, bankruptcy or negligence of a dealing member firm of the Exchange; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a dealing member firm.

Investor Protection Fund is a statutory fund established by the NSE pursuant to Section 197 of the Investment and Securities Act (ISA) to compensate investors who suffer pecuniary loss from the stock market.

Currently, any dealing member firms of the Nigerian Stock Exchange is meant to contribute a mandatory initial payment of N1million to the IPF prior to the Dealing Members firm’s acquisition of a Dealing Membership license from the Exchange.

The value of the mandatory initial payment by Dealing Membership may be changed from time to time as determined by the Board of IPF, subject to the approval of the Exchange. This is in addition to other sources of the IPF.