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Stockbrokers risk N5m fine for unauthorised sale of clients’ shares

By on March 11, 2016

Dealing Members (stockbrokers) of the Nigerian Stock Exchange (NSE), who sell or transfer any securities worth N5 million will pay a fine of N1million. If the value of the security is higher than N5 million, the brokers will pay a fine of N5 million in addition to losing their licences.

These are some of the amended rules introduced by the NSE to protect investors in the market. The rules, which were approved by the Securities and Exchange Commission (SEC) since last December, became effective two days ago.
Besides, the broker will not be permitted to keep any benefits accruing from such transaction, including but not limited to bonuses, rights, commissions, cash dividends, capital appreciation, and any profit accruing therefrom whatsoever.

Also, a dealing member that sells or transfers securities without the authorisation of the owner shall: be required to buy back the securities along with any accrued benefits within a period of 14 business days from the day the dealing member is required to buy back the securities by NSE.

According to the rule, “where the sale transaction is N5 million and below in value, the dealing member be liable to pay a fine of N1 million or three times the value of the sale or transfer, whichever is higher, and N5,000 for every day from the day on which the dealing member is required to buy back the securities by the NSE until the day the dealing member completes buying back the shares for the owner.”

“Or where the sale transaction is higher than N5 million in value or the dealing member has engaged in such unauthorised sale, or transfer of securities on a previous occasion, it shall have its dealing license withdrawn by the Council of the NSE and shall in addition be liable to pay a fine of N5 million or three times the value of the sale or transfer, whichever is higher and N5,000 for every day from the day of the sanction until the day the Dealing Member completes buying back the shares for the owner.”

Meanwhile, trading at the stock market closed positively as the NSE All-Share Index gaining 0.51 per cent to close at 25,885.31. The NSE Oil & Gas Index and NSE Baking Index appreciated by 0.71 per cent and 0.67 per cent respectively driven by gains in Oando Plc (10.17 per cent0 and FCMB Group Plc (7.89 per cent) in that order.

 

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