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SEC probe may damage investor confidence say analysts

By on March 25, 2013

The ongoing probe of the Securities and Exchange Commission (SEC) by the House of Representatives Committee on Capital Market could damage investor confidence if not properly handled, analysts, including US based professor, Abiola Awosika, have said.

Controversy generated by the House probe led to the fall of the committee, after it was alleged that its chairman, Herman Hembe, had made questionable requests to SEC for financial support for the hearing, and that he had collected a flight ticket and estacode at the expense of the commission, to attend a conference in the Dominican Republic .

Abiola Awosika, a don at the University of Wisconsin , commenting on the development, said the capital market may suffer losses in integrity, if the probe was not well handled. Awosika is of the view that the House committee had made a mistake with their views on the role of the SEC, in their line of questioning.

Awosika went on to say that what the securities market regulators do globally, is to ensure a fair, orderly and transparent market, in which securities trading can occur without hindrance.

She went on to liken the capital market to “a game of football where fans would study their favourite teams, know the players, the coach and the tactics, then start placing bets on the performance of their teams. If their teams lose, they would never go to the FA to ask for their money back.”

According to her, the SEC is like the football association (FA); it makes the rules, regulations and enforcement for fair play. No one institution anywhere in the world can guarantee investors funds. It is evident that the committee members were clearly clueless on the capital market issues.

Market analyst, Bismarck Rewane, chief executive, Financial Derivatives Company Limited, said the probe was wrongly headed from the start.
According to him, “If we care about market recovery and are interested in understanding reasons behind the fall, why was it that no one at the helm of affairs five years ago had been called to testify.

“What really is public interest?” Rewane asked, wondering “how an inquest into the collapse of a market has degenerated into how much was spent for lunch five years after the collapse.”

The public hearing by the House was thought to be one of the key activities preceding a bill to encourage big but unlisted firms to come to the market.
Many market operators now fear that the poor handling of the hearing by the deposed committee may have served to present a strong case against market listing.

 

 

[Business Day]