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SEC warns investors against illegal fund operator

By on February 4, 2015

The Securities and Exchange Commission on Monday warned investors against investing in a fund called the Energy Sector Credit Enhancement Fund and dealing with Michelle-Vault Partners Limited.

According to the commission, both the fund and its promoter, Michelle-Vault Partners, are not registered with the commission and are, therefore, illegal.

A notice warning investors of the fund and its promoter read in part, “The attention of the Securities and Exchange Commission has been drawn to a purported fund ‘Energy Sector Credit Enhancement Fund’ being promoted by Michelle-Vault Partners Ltd.

“In order to convince unsuspecting investors of the authenticity of the purported fund, the promoters have misrepresented to the general public that the said fund is managed by major players in the Nigerian capital market.”

SEC explained that based on the fact that the promoter was not authorised to operate in the capital market, the fund was aimed at defrauding unsuspecting investors.

“The said ‘Energy Sector Credit Enhancement Fund’ is not registered by the commission and the promoter, Michelle-Vault Partners Limited is also not registered to perform any function in the capital market. The purported fund therefore appears to be an outright fraud,” it said.

“In view of the above, the general public is hereby warned that any person subscribing to the purported fund or dealing with Michelle-Vault Partners Ltd. in any capital market related business is doing so at his/her own risk.”

Following the market crash of 2008/2009, SEC adopted a zero-tolerance stance with regards to market infractions, a position that had seen operators sanctioned and illegal operators exposed.

In the last two years, several illegal operators and wonder banks across the country had their businesses shut down.

One of the biggest illegal operators shut down in recent times was New Nation Finance House, which had operations in seven states, including Kebbi, Cross Rivers and Benue.

SEC said it shut down the company after discovering that it was “neither registered with the Central Bank of Nigeria nor with the SEC, the two financial regulatory bodies in the country.”

In the process, 14 of the company’s officials were arrested.

In 2013, over five illegal operators were identified and sealed.

For instance in November of that year, SEC shut down the operations of Royal Benchmark Limited for operating in the capital market without a licence.

The development had come just days after SEC shut down the illegal operations of another firm in Port Harcourt and Sokoto.

Apart from the illegal operators, several operators had been sanctioned for various infringements.

They include Cashcraft Asset Management Limited, which was in 2013 suspended from all capital market activities for violating Section 155 of the ISA 2007 in its management of Anchor and Bedrock Unit Trust Scheme.

Cashcraft had contravened the provisions of the Act by co-mingling the Fund’s assets with its own, violating the Funds’ Trust Deed and Asset Allocation Policy, and failing to file the requisite returns to the commission.

SEC had said at the time, “This string of closures by the commission should send a strong, unequivocal message to illegal fund managers and sundry perpetrators of indiscipline and malfeasance in the capital market that it is time they sought a worthier endeavour.

“Illegal entities erode the integrity stock in our markets in addition to introducing hapless investor publics to the agony of loss of value. The SEC frowns severely at their existence.”

Shareholders groups have, however, expressed concern that the continued emergence of illegal operators was a serious cause for concern and stress that the regulatory bodies much do much more to protect investors.

 

[Punch]