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158 investors to get N42.2m from protection fund

By on August 7, 2015

The Board of Trustees of the Investors’ Protection Fund of the Nigerian Stock Exchange on Wednesday said that it would compensate 158 claimants for “pecuniary losses suffered by them as a result of wrongdoing by certain dealing member firms of the Exchange”.

A total of N42.227m was approved for the 158 investors as compensation for fund misappropriation by 29 dealing member firms of the Exchange who are either inactive or have been expelled as members of the Exchange, a statement by the NSE said.

It added that the compensation is pursuant to Part XIV of the Investment and Securities Act 2007.

The IPF is a statutory fund established pursuant to Section 197 of the ISA to compensate investors who suffer pecuniary loss arising from the revocation or cancellation of the registration of a dealing member firm by the Securities and Exchange Commission; and the insolvency, bankruptcy or negligence of a dealing member firm of the Exchange.

It is also aimed at compensating investors who suffer losses arising from “defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a dealing member firm”.

According to the statement, the 158 claimants due to be compensated are investors whose claims were verified by the Exchange, approved by the Board of Trustees of the IPF, and whose identities were verified by an identity verification consultant engaged by the IPF.

The claimants were found to be eligible for compensation in accordance with the relevant provisions of the ISA and the IPF Rules.

The statement explained that the Board of Trustees, in accordance with the rules of the fund, had set a maximum compensation amount of N400,000 per claimant.

The Vice-Chairperson of the IPF’s Board, Mr. Fubara Anga, was quoted as saying, “it has been a long, rigorous and transparent process getting to this stage. We researched global best practices and based on our findings, we took decisions on various issues regarding the IPF, benchmarking our processes and procedures against other international investors’ protection funds.

“First of all, we put in place an appropriate corporate governance structure for the fund; we adopted rules for the IPF and then following transparent and auditable selection processes, we appointed auditors as well as identity verification consultants. We then commenced the process of identifying claimants and verifying their claims. We must thank the claimants for their patience.”

The Chief Executive Officer, NSE, Mr. Oscar Onyema, who is also a Trustee of the IPF, expressed delight at the development, stressing that it affirmed the Exchange’s commitment to the continuous development of initiatives that would bolster confidence in the capital market.

He said, “Though the compensation payment may not be a complete restoration, it is a show of good faith on our part to investors. I thank the Board of Trustees for their guidance and commitment, the claimants for their valuable patience, and all other stakeholders for their contributions towards the success of this exercise.”

On her part, the Head of Legal and Regulation, NSE, and Acting Secretary to the Board of Trustees, Ms. Tinuade Awe, explained that the claimants would be duly advised about the processes to receive their compensation payments.

 

[Punch]