Capital market regulators have been urged to deploy preventive market regulatory methods to enthrone confidence in the Nigerian market rather than its current curative method which leaves investors shortchanged.

To usher in a more vibrant capital market, the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) should end the era of treating stock brokers with kid gloves and adequately detect fraud before it is committed to deter huge losses suffered by investors in the hands of stock alleged and identified fraudulent stockbrokers.

This comes as capital market regulators have fingered delayed disclosure of suspected crime which aid criminal activities in the market; late report would foreclose proactive action to forestall the crime from being committed.

An investor in the Nigerian capital market, Mr. Arnold Ekpe, former helmsman of Ecobank Transnational Incorporated, currently contesting alleged theft of  N1,237,246,095 and USD80,000 by a stockbroker, Mr. Victor Ogiemwonyi and his firm Partnership Securities Limited (PSL), alleged that treating stock brokers with kids gloves emboldens them to defraud investors.

He said that such scenario would liken the Nigerian market to a “swamp with crocodile stockbrokers waiting to ambush their clients and rob them of their hard-earned savings.”

Meanwhile, a reliable capital market regulator has said that the silence of investors when they suspect a crime about to be committed helps to boost unethical practices in the market and should be avoided.

The source, while sympathizing with investors who lost their money through fraudulent acts of their brokers or erstwhile friends in the market was quick to ask: “Why would an investor receive more than 70 alerts of sale of his shares from the Central Securities Clearing Systems (CSCS) without receiving value in his bank account, yet refuses to report to the regulators and law enforcement agents?”

The source further queried the rationale behind an investor losing N1.2 billion and yet waited for three months before contacting the Exchange or the Economic and Financial Crimes Commission (EFCC) for help.

For clearer direction on regulatory activities, the source was also quick to ask: “Why would an investor mandate his broker to sell shares at a particular price and what he was selling was short of the mandated price, yet no report was made?”

The source said that even as the alleged fraudulent stockbroker, Mr. Ogiemwonyi is not a member of the council of the NSE, yet the Exchange went beyond its call of duty to even report to other institutions and blocked monies that could be saved at the point of information reaching the NSE.

The source urged investors to ensure that they deal with registered members of the exchange, revealing that many investors don’t even know that the affected companies are not licensed members of the exchange nor the product a tradable on our platform.

“PICO – the company where most investors lost money is not a member of the NSE and the product (PSDA) is not traded on the stock exchange”

These manifested from allegations against Mr. Ogiemwonyi and Partnership Securities Limited (PSL) by Mr. Ekpe alleging that the PSL misappropriated the sum of N1,237,245,000, being part of the proceeds of the sale of his shares (96,077,872 units of Ecobank Transnational Incorporated Plc) and dividends of US$80,000.00.

Ekpe alleged that although he completed a form indicating that the proceeds of the share sales should settle into his bank account under the Direct Cash Settlement system, PSL elected to settle the proceeds into its own account and misappropriated the funds.

He acknowledged that his mandate to PSL to sell 96,077,872 shares were executed at N16 per share; amounting to N1,537,245.952, while a deposit” of N300,000,000  was paid to his account while the balance sums of “N1,237,245.95 and $80,000” remained unpaid.

Daily Times findings revealed that the issue is currently in the court, and also being looked into by the capital market regulators,

Reactions from the NSE acknowledged complaints from Mr. Arnold Ekpe against Partnership Securities Limited and Mr. Victor Ogiemwonyi which also alleged that even though he filled forms for Direct Cash Settlement, proceeds from sales of his shares were not paid directly into his bank account.

The NSE pointed that Mr. Ekpe took to other avenues for recovery, including self-help instead of exhausting The Exchange’s internal dispute resolution process, revealing that on 17 October 2016, it suspended PSL from trading on all floors of The Exchange, effective 18 October 2016, and has since remained under suspension from trading on the floor of the Exchange.

It further revealed that the NSE same day requested the Central Securities Clearing System Plc. (CSCS) to request the settlement bank to place N42, 499,761.20 proceeds from the sale of ETI shares for Mr. Ekpe made by PSL on 14 October but due to settling on 18 October 2016 into a special CSCS bank account in order to prevent the proceeds from settling into the account of PSL.

“Subsequently, the sum of N 43,301,792.70 being the proceeds of sale less statutory charges was paid to Mr. Ekpe’s Union Bank Plc account on 3 November 2016 as a direct result of the steps undertaken by The Exchange immediately upon its receipt of Mr. Ekpe’s complaint.”

The NSE said that it followed up with formally informing the SEC of the complaint and requested for a joint examination of PSL and its associated companies. This formal notification was a follow up on an earlier oral notification to relevant personnel of the Commission shortly after receipt of the complaint on 17 October 2016.

According to the NSE, Ogiemwonyi’s continued detention has made it impractical for The Exchange to take him through its internal disciplinary process of The Exchange. It also noted that Mr. Ekpe complained on 16 October 2016, several months after the first trade occurred on 30 June 2016.

“This is despite the fact that he received 80 trade alerts regarding the transactions in his shares. However, he did not notify The Exchange that anything untoward was occurring on his account, i.e., that the proceeds of these transactions were not being paid into his account directly as he had directed PSL to do”

The Exchange acknowledged other instances of alleged regulatory infractions by Partnership Investment Company Plc (PICO) (a related company to PSL) which is not a Dealing Member of the Exchange and is, therefore, not subject to the regulatory supervision or jurisdiction of The Exchange. Furthermore, the investment products offered by PICO are not under the supervisory jurisdiction of The Exchange.


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