From Azimazi Momoh Jimoh
• AP alleges smear campaign against Otedola
ARRANGEMENTS have been concluded by the Securities and Exchange Commission (SEC) to prosecute 260 persons suspected to be guilty of various offences including insider dealings within the troubled Nigerian Stock Exchange (NSE).
SEC’s Director-General, Arunma Oteh, at a meeting with the House of Representatives’ Committee on Capital Market at the National Assembly on Tuesday declared that the commission had carried out a thorough investigation on complaints it received from many Nigerians about the activities of some persons alleged to have contributed to the crisis in the NSE.
She said: “We have also been working very hard on some of the complaints that ordinary investors have shared with us as to some of the things that happen in our market. As a result of that, we are going to take about 260 individuals and entities to the Investment and Securities Tribunal for different types of allegations of share price manipulation and insider dealings.”
Meanwhile, the management of African Petroleum Plc (AP) has alleged that a malicious campaign was being waged against the oil company and its chairman, Mr. Femi Otedola, by a suspended director of the firm who was brought on board by shareholders.
Oteh who briefed the House Committee on the damage which the crisis in the NSE had caused to investors and the Nigerian economy, said: “Like you know, our call and mandate is to protect public interest and to protect the investor, particularly what I will consider the voiceless masses of people who have seen the market in our country over the last three years as an opportunity for them to participate in developing our economy, to create wealth for themselves, whether they be local investors or international investors. As honourable members, you would recollect that at the peak of our stock market, the valuation of our stock market was over N12 trillion. But in March, 2009, there was an unprecedented crash in our stock market which made the market reached a bottom of N5.5 trillion.
“A lot of average Nigerians were severely affected by this crash because over the last few years, a number of ordinary citizens of our country have invested in our market, but today, more than seven million investors who invested in the market directly were affected by the crash. Therefore, we have seen since this unprecedented crash the fragility in investors’ confidence.”
Oteh enumerated the measures which SEC had taken to resolve the issues that caused the crash saying: “As a result, since the crash, the SEC has spoken on how to enhance its own capacity to regulate the market; has tried to focus on addressing the issues that led to the crash, some of which relate to the global financial crisis, some which relate to market integrity issues in our market.”
Still trying to convince the committee on the need to prosecute those found to have acted against the smooth operations of the NSE, Oteh decalared: “There have been allegations of insider dealings, of share price manipulations, of weakness in enforcement of excessive risk taking and notably, the fact that there have been a lot of marginal loans that were taken both by institution investors and by retail investors with no adequate guidelines.
“As regulators, we have also looked at the things that we haven’t done over the last few years that impacted on the market and led to, or accelerated the crash. We feel that there haven’t been sufficient coordination amongst regulators, and I believe last year, both the Ministry of Finance and the Central Bank have put in place, measures to try and enhance this coordination, and we at the SEC have been actively participating in this respect.”
According to her, guidelines had been developed to improve on the situation in the NSE.
Her words: “The SEC and the CBN are working very closely together to develop guidelines that would ensure that the kind of excessive risk taking and the margin lending that we saw in our market don’t happen again, and we hope that very soon, we can publish those guidelines because we have had the opportunity of having the capital market operators review these guidelines, made comments on them; we had experts from outside and from other jurisdictions looked at the guidelines. We had those guidelines approved by the Minister of Finance as is statutorily required”.
On the remote causes of the crash in the NSE, Oteh said: “We had a market that was not as deep, or as broad as it should be. Because breadth and depth help to immunize the market against crises. What is important is to have a market that is deep and broad such that it doesn’t have that kind of impact that it have had on our economy.
“So, some of the things we are doing are to try and help the market not just to be dependent on equities, but to build a very strong system. In that respect, the Federal Government has taken the lead in developing a world class sovereign bond market under the auspices of the Debt Management Office with the guidance of the Ministry of Finance, because the sovereign bond market provides the benchmark which is the basis for state governments’ bonds or for corporate bonds to be priced.
“What we have seen also was that because of the commitment of the President to developing this market, recently, he approved some waivers which have allowed us to take away the discrimination that we have seen in the past where corporate bonds and state bonds were not as attractive as sovereign bond. This has allowed corporate bonds and state bonds to become at least 300 points cheaper than they would have been in the past. We believe this will help build a truly sustainable bond market, which will enable us to address some of the challenges that our country faces in terms of infrastructure, in terms of companies being able to raise money to be able to address some of the immediate needs, rather than waiting to raise equity in order to address those needs.”
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