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NSE uncovers 68 cases of unauthorised share sales

By BusinessNews Staff on September 30, 2014

The Nigerian Stock Exchange has in line with its zero-tolerance for market infractions imposed sanctions – from fines to suspension – on operators and other market participants.

However, the report of the Exchange’s Disciplinary Committee for 2013, showed that the battle to check infractions was not over even though reforms in the market were adjudged by economists and market analysts to have made the Nigerian Stock Exchange more credible and transparent.

The report of the committee, which is chaired by Mr. Chike Nwanze of Icon Stockbrokers Limited, showed that there were 68 cases of unauthorised sale of client’s shares and market manipulation during the year.

The report, which was contained in the Exchange’s 2013 annual reports and accounts, showed that the committee dealt with 68 complaints made against seven dealing member firms for the unauthorised sale of clients’ shares.

In respect of these complaints, the committee explained that it dealt with issues centred on the protection of investors as well as measures to sanction erring dealing firms.

It said, “In one of the cases dealt with by the committee, the dealing firm fully complied with the directives of the committee and restituted the complainant that lodged the complaint.

“In the remaining cases where the dealing member firms failed to comply with the directives of the committee to restitute the complainants, additional sanctions were imposed.”

This, it said, included monetary fines, referral to other regulatory and or law enforcement authorities such as the Securities and Exchange Commission, Economic and Financial Crimes Commission and the Chartered Institute of Stockbrokers as well as continued suspension.

With regards to market manipulation, the committee said two cases were brought before it involving allegations of suspected market manipulation.

“The committee found that the facts disclosed were sufficient to sustain cases of market manipulation in violation of Articles 15, 104 and 107 of the Rules and Regulations Governing Dealing Members of The Exchange,” the report said.

In both cases, the committee said the dealing member firms were suspended, fined and publicly censured.

It, however, observed that both dealing firms appealed the committee’s decisions.

But, the National Council of the Exchange upheld both decisions of the committee after which both of the firms paid the fines and the matters were concluded.

The committee also commented on efforts to rebuild investors’ confidence in the capital market, noting that it “is aware of the overwhelming need to restore investors’ confidence in the market following the various unethical and fraudulent practices of some dealing firms, most of which were suspended for a number of infractions and have become inactive.”

It said, “In 2013, the committee deliberated on the disciplinary actions against inactive dealing member firms and dealing member firms that failed to activate their licenses.”

It added that based on its recommendation to the Council that disciplinary action should be taken against such firms, the Council approved the commencement of the disciplinary process.

[Punch]

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