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First Registrars, SEC in court over alleged share deal

By on April 11, 2011

To avert the sanction threatened against it over alleged shares’ transaction by the Securities and Exchange Commission (SEC), the First Registrars Nigeria Limited, has gone before a Federal High Court in Lagos.

The penalty by SEC, contained in a letter dated February 9 this year, directed First Registrars to refund to an aggrived investor, Elder Nkem Nosiri, about N339.8million “plus accrued interest at MPR + 2 per cent from January 31, 2008 to the date of payment.”

First Registrars was further directed to pay a penalty of N5, 000 daily from January 31, 2008 to the date of payment, failing which severe punitive measures would be extended to it.

The penalties resulted from the outcome of SEC’s investigation of a petition by Nosiri, who alleged that the firm and some of its agents purchase d 20 million shares in the 2007 Initial Public Offer (IPO) of the Platinum Habib Bank (BankPHB).

Nosiri had in the petition dated September 28, 2009, written by the firm of Vincent Essien and Co, claimed that during the said BankPHB offer, he applied and paid N340million for 20 million units of shares, through a purported agent of First Registrars – Inter Millennium Investment Limited.

He stated that at the end of the offer, he was shocked to realise that the 10 offer forms of two million units each (amounting to 20 million), which he completed and were duly returned, were allegedly manipulated. He added that he was later issued 2,000 share certificates, containing fictitious names, with each worth 10,000 units.

The petitioner noted that although First Registrars denied any involvement in the said unauthorised substitution of his applications forms, the company allegedly sacked one of its staff memberrs, Mrs. Nike Efiok, over her alleged role in the transaction.

Nosiri, who claimed to have lost N340million in the transaction, urged SEC to compel First Registrars to make refund to him. He observed that despite the company’s denial of culpability, it initiated attempt to consolidate the shares in his favour, using the services of a stock broking firm, Cashville Investment and Securities Limited.

First Registrars, in its response to the petition dated November 12, 2009, denied culpability, accusing the petitioner of engaging in unethical conduct and utilising an unregistered stock broking firm for the transaction.

Despite First Registrars’ position, SEC found it guilty and in an August 20 letter, ordered it to pay the said fine. Dissatisfied, First Registrars in a letter dated August 25 last year, appealed for a review, SEC reviewed the case and upheld its earlier findings, consequent upon which it wrote the February 9 to First Registrars.

SEC warned First Registrars to comply with the directives within two weeks, “failing which severe enforcement action shall be taken against you,” a development which informed First Registrars’suit.

The suit, which has SEC as the sole respondent, seeks a judicial review of SEC’s directives among others reliefs.

First Registrars wants the court to declare that SEC lacked the powers to impose the sanctions contained in the February 9 letter, when it (the plaintiff) was not found to have violated or contributed to the violation of any section of the Investment and Securities Act 2007 and SEC’s rules and regulations.

source : The Nation