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Illegal Fund Manager Axed By SEC

By on December 19, 2012

As part of its determination in ensuring that effective reforms and sanity is restored back to the  operations of the stock market and  the  hedge fund management  process.The regulatory body for the capital market , the Securities and Exchange Commission (SEC) has shut down the office of an illegal fund management group.

After the post 2008 recession that affected the globe, it was discovered in the United States of America, Nigeria and even Japan, that part of the factors that aided the near collapse of the capital markets of these countries, was the incidence of high level fraud and manipulation of figures and stocks by some brokers and fund management groups.

In Nigeria thousands of people lost millions of Nigeria in the last Capital market crisis to the activities of  some unscrupulous and greedy hedge fund managers and stock broking firms. This therefore prompted Nigeria to join the United States of America in tightening its policy on consumer protection.

The Illegal fund manager Avenues to Wealth, had its office sealed yesterday by the enforcement unit of the commission following several complaints from the customers of the company of its  irregularities .

One of the reasons the Fund manager had its operations closed according to the commission, was the fact  that it did not register its  operations with the commission a serious offence  and breach of the provision of the law.

It can be recalled that the ‘Ponzi scheme’ a  term used for describing the  deceptive scheme of fund managers, stock broking firms, and other groups in the stock market was also another reason why the Government  restructured the operations of the market  through SEC.

Assistant Director, Enforcement and  Compliance  Mr Bernard Ebe  speaking on the way the illegal operations are carried out said“They lure people to bring their money to them and in the process they pay dividend or interest as the case may be. From there they pay the initial investors in the scheme, but when the investors have brought a lot other investors on board of the scheme, they will shut their premises, thereby making several investors lose millions of naira.”

Already four top managers of the company including the Managing Director Mr Adeolu Akinyemi have been arrested and taken to the ‘Area F’ section of the Nigerian Police Force.

The swift action of the enforcement unit of the Securities and Exchange Commission  was timely, as several fund managers operating illegally have succeeded in swindling their customers and closing their offices, without being caught.

Mr Ebe  speaking further on the development, stressed that “Three month ago details of the operations of the company came to the Commission. Section 153 of the Investment and Security Act (ISA) showed that operators of such fund must obtain license, to ensure close monitoring by the commission and more so, they are expected to file returns to the commission.”