The Securities and Exchange Commission (SEC) on Tuesday, 19th September, 2017, demonstrated strong commitment to ensuring than Nigerian capital market remains credible and transparent with high zero tolerance to unethical practices.
Chief Executive Officer of Partnership Securities, Victor Ogiemwonyi, and some of his employees were alleged to have misappropriated funds of PSL’s clients valued at over N10 billion.
Recall that in May 2016, SEC banned the Managing Director of BGL Plc, Mr. Albert Okumagba and his deputy, Chibundu Edozie, from carrying out capital market activities for 20 years, and ordered his companies to restitute investors over N2bn.
The ban also followed complaints from investors against Okumagba and his company over failure, refusal and or/neglect to liquidate their investments in both the Guaranteed Consolidated dated Notes and Guaranteed Premium Notes, two investment products run by the company.
On 16th April, 2009, Mr. Eugene Anenih, over the recent share price manipulation of African Petroleum (AP) Plc.
For employing “manipulative and deceptive devices and contrivances in its transactions on AP Plc shares”, the Securities and Exchange Commission (SEC), suspended Nova from all capital market activities for one year.
Some directors of the company, who were also sanctioned by the SEC in the latest offensive, are, Mr. Henry Omoragbon; suspended for a period of five years;
Mr. Ojetunde Taiwo, Mrs. Ogiemwonyi Olufunke, Mr. Ogiamien Frank, Mr. Adeusi Aladejola Alexander, and Mrs. Arese Ugwu;they were suspended for a period of 5 (Five) years from engaging in capital market activities in the Nigerian Capital Market,
banned from holding directorship positions in any public company in Nigeria for the said period and ordered to pay a penalty of N100, 000 each for breach of Rule 1(iii) of the Code of Conduct for Capital Market Operators and Their Employees as contained in the SEC Rules and Regulations made pursuant to the Investments and Securities Act 2007.
Barely a year ago, precisely on 30TH September ,2016, the SEC Nigeria, handed over life ban on Mr. Taofik Lawal and Mrs. Iyabode Lawal from operating in the capital market for mismanaging stocks and unauthorized sale of shares.
Cross section of stakeholders in the capital market stakeholders reacting to the sanction, hailed the ban, emphasizing that such abuse of public trust deserves stiff sanction such as the life ban.
Mr. Godwin Anono, one of the victims of partnership fraud speaking to Daily Times shortly after pronouncement of the ban on Victor Ogiemwonyi CEO, Partnership Securities limited, lauded the commission, but said that measures should be taken to reimburse them of their loss in the market.
“ I lost about N150 million to Partnership fraud and some widows also lost huge money to them, so , SEC should work out how to compensate us , because they gave them the platform to dupe us”
According to Anno, many stock broking firms have used the platform sanctioned by the SEC and the NSE to defraud unsuspecting investors and quietly close shops, and such developments in the market have steadily weakened market confidence.
“Can you recall that Partnership ranked among top ten stock brokers in the market, see where they are today and
What has happened to all of us that trusted them as licensed by the NSE and SEC as certified market players” Anono said.
He pleaded that placing life ban on Ogiemwonyi should not mean that he has lost his N150 million under his care, but a step towards receiving his funds within very short period of time.
He said that “Sending them to jail will show their families and other people that they are thieves.”
He said while others are suffering, the culprits are rejoicing and that is what will continue erode market confidence.
There are many victors in the Nigerian capital market who have used the market front to defraud many unsuspecting investors of huge sums of money and eventually closed shops, some of them are now operating Bureau De change”
He said that the dearth of trust in the market has made it imperative for retail investors not to be interested in public offer and or right issues, a development, he described as detrimental to market development.
Anono said: “People like me are not supposed to be crying by now because of money, but Victor has made me to cry, people are now laughing at us.”
According to him, “There is corporate looting everywhere and people that are supposed to be role models are now breaking market rules and making illegal money.”
However, senior stock broker and principal partner, Matog consulting, Matthew Ogagavworia told Daily Times that life ban should be imposed on them. “Life ban is in order for those who abuse Public Trust.”
he said that Victor Ogiemwonyi, the CEO partnership investment and other market operators earlier sanctioned by SEC ought to be role models and of high ethical standing , but the reverse was the case. “Victor is supposed to be a role model, but he messed up,” the senior stock broker said.
Comparing current SEC sanctions and what was obtainable in the market before, especially, when Nova securities boss indicted in manipulation of AP shares was sanctioned for five years, against current life ban by Mounir Gwarzo led SEC, he said.
“ That was before, times have changed, if Nova commits that kind of offense today, he will be banned for life. He will require a Court to reverse it.”
Ogagavworia, proffering solution to avoidance of such criminal activity called for “regular review of the provision that stockbroking firms maintain separate account from client account, sweeping of sales proceed when they settle from Stockbroker Account , stricter enforcement and more regulatory inspection of Stockbroking firms.”
Another stockbroker who spoke to Daily Times on condition of anonymity, said that that some capital market operators who defrauds people should be made to repay all that has been stolen with interests,
hence most they deploy such stolen wealth through some vehicles to treasury bills or government bonds that guarantees high coupon and returns on investment.
“They should be made to restitute what they stole with interest and also serve jail term” the broker said.
Ogiemwonyi was alleged to have misappropriated funds of PSL’s clients valued over N10 billion. However, the client, who first raised the alarm is Mr. Arnold Ekpe, a former Chief Executive Officer of Ecobank Transnational Incorporated (ETI).
Ekpe, said that the PSL boss sold his ETI shares valued at N1.2bn without remitting the proceeds into his account. Ogiemwonyi was also alleged to have misappropriated $80,000 belonging to Ekpe.
Ekpe’s lawyers, Sofunde Osakwe Ogundipe & Belgore, said his client gave PSL an exclusive mandate to dispose of the ETI shares at N16 per share within three months spanning July to September, 2016.
The lawyers noted that in compliance with the Central Securities Clearing System (CSCS) Plc rule for such transactions, Ekpe filled in a number of forms including the CSCS account creation form, client’s bank details, and the investor’s bank account update form for direct cash settlement.
According to the lawyers, considering that Ekpe filled the necessary forms as required under the CSCS rules, the proceeds of the sales ought to be paid into his account in compliance with Rule 16:3 of the Direct Cash Settlement (DCS).
The lawyer said that instead of paying the money into Ekpe’s account, Ogiemwonyi sold the shares and paid the proceeds into his account.
They accused the Nigerian Stock Exchange (NSE), CSCS and Securities and Exchange Commission (SEC) of complicity and connivance hence the stockbroker succeeded in getting away with the proceeds.
However, the NSE denied complicity and involvement in the share scandal, saying that it has zero tolerance for unethical practices.
The Exchange revealed that following receipt of the complaint dated 16 October 2016 by Ekpe against PSL, it immediately swung into action to arrest the situation and prevent further loss.