The Director General of the Securities and Exchange Commission (SEC) recently spoke to the media on the just concluded Capital Market Committee (CMC) meeting. Below are excerpts of the briefing:
Ponzi schemes are springing up every day. What is the Commission doing to stem the tide?
It is big problem for our economy, every year, every month, every day many of our citizens loose some substantial amount of money to Ponzi schemes operators. The Commission has adopted a variety of measures, including putting up the list of authorized capital market operators on our website, so that any interest investor will check on our website to confirm the scheme they intend to invest in is truly a registered operator by the SEC.
Unfortunately, many of the Ponzi schemes operators once they give the mouthwatering, promises, they entice so many valuable investors and in the end money is actually lost and these investors start flogging to our offices to complain. Actually they can just check our website, 2 minutes is enough for you to ascertain whether this investment firm that promises the hefty returns is actually registered with the SEC.
So we have engaged a number or regulators and also a number of media platforms to ensure that the message is actually delivered to the public that any return, promises that looks so generous should be suspicious and people should check with the commission before going ahead to invest.
The Commission continues its campaign against illegal operators in the capital market, especially Ponzi Schemes and has adopted multi-level engagements with media platforms and regulators of publicity agencies in order to curb the reach and activities of these illegal operators. While we continue our activities to resolve the complaints that have been forwarded to the Commission through the official channels, it is important to reiterate to the investing public to be wary of unscrupulous schemes that promise unrealistic returns on investment.
This is a continuous fight, we are not resting on our course in this and we urge also the press to help in disseminating this information. Am sure some of us know 2 or more persons, probably maybe a relation or a friend that has lost money to Ponzi schemes in its recent times. So I think we all owe ourselves a duty, to our friends and relations to make sure that we do whatever we can to join this fight and to educate and enlighten them that these Ponzi schemes are truly cancer to our society and all hands should be on deck to fight these cancers.
We will like to use this opportunity to reiterate our commitment towards zero tolerance for market infractions. We urge every capital market operator to operate within the market functions approved for it by the Commission. The Commission will not hesitate to deal decisively with any operator who carries out any activities outside the function(s) approved for it by the Commission. No capital market can grow without discipline and adherence to laid down Rules and Regulations.
What efforts have the Commission made in deepening the commodities trading ecosystem?
The Commission in encouraging investments in the commodities space and we have engaged the Standard Organization of Nigeria, we have engaged with the National Insurance Commission and the Federal Ministry of Trade and Investment amongst other strategic partners and also engage the Federal Ministry of Mines and Steel development. So all of these is with a view to encourage investments in this massive area were Nigeria has advantage of dramatic comparative advantage compared to many other countries.
As part of measures to deepen the commodities ecosystem, the Commission held engagements with the National Insurance Commission (NAICOM) towards de-risking and insuring certain commodity assets, which we believe will attract more investments within the space, particularly from the Pensions industry. A technical committee was also constituted comprising representatives of the Commission, Standards Organization of Nigeria (SON), AFEX, Lagos Commodities and Futures Exchange (LCFE) & Nigerian Commodities Exchange (NCX) to deliver agro-based standards within 3 months.
To develop an effective price discovery mechanism for the commodities ecosystem, the Commission has equally solicited the support of the National Bureau of Statistics (NBS). A technical committee has been constituted for this purpose with the mandate of developing modalities for this exercise.
Again, for agro based commodities to be traded, you will need the standards and these standards will be developed by different agencies but principally by the Standard Organization of Nigeria (SON). So we have engaged with this organization and a committee has been setup and they will be working hard to ensure that we have this standard ready in the next 3 months.
Can we have an update on the current figure of mandated accounts?
From the inception of the e-dividend portal which was in 2016 to July 2021, the total mandated and approved accounts is 1,144,970. This is at July 2021. That is the total number of mandated accounts. The issue of Covid -19 from last year as affected the registration.
I am still concerned about the unclaimed dividend in Nigeria, you said the SEC has come up with a number of things and at the end of 2019, we understood that the total number of unclaimed dividend stood at N158.14 billion, now after this 2nd CMC meeting 2021, we would like you to give us the real figure of what the unclaimed dividend is in Nigeria capital market, because recently Lafarge Africa published the list of unclaimed dividend of over 300,000 shareholders appeared on the list, i.e about 160 pages which was humongous. We want to know how this is being tracked. It is just unfortunate that this is happening to us in the Nigerian Capital market.
Sir what is the current figure of unclaimed dividend?
Thank you. I share your concern on unclaimed dividend and truly and with the example you gave on Lafarge it is a sad example for a single company to have over 300,000 and whatever the number is, but for a 164 pages is actually so much.
The truth of the matter is that we have problems with identity management in the Nigerian Capital Market and this is one of the things that the Commission has been trying to resolve. With the effort that the Commission has made just recently, to setup a high powered committee to look at this issue.
In June 2021 the Commission constituted a Committee on Identity Management for the Nigerian Capital Market. The committee is chaired by Mr. Aigboje Aig-Imoukhuede and is expected to harmonize various databases of investors, and facilitate data accuracy in the market. We are optimistic that the outcome of this committee’s assignment would address the challenges of identity management and help resolve some of the issues we face in the areas of unclaimed dividend, direct cash settlement and multiple subscription.
There are people who have bought shares under false names before which is what we refer to multiple subscriptions problem. The truth is there is a problem with the process and there is a problem with us as a people, because if you are buying securities using your own wealth, then why would you use another person’s name that may not be traceable.
Most of the things became an issue after the introduction of BVN, because BVN is tied to only one name. if you have another name that you were using before then no account will be opened for you and those accounts cannot be accepted by your bankers. Only God knows now how many bank accounts at the bank cannot be connected to BVN simple because they cannot be traceable to the owners.
It would interest the market to note that the Commission has recently extended the due date for renewal of registration. Consequently, the registration portal has been reopened until August 31, 2021. This is to enable operators that are yet to update their information with the Commission do so before the end of the new deadline. So to answer your question, I can give you the most recent figure for unclaimed dividends and the answer to your question is that the figure is around N170 billion. This could actually increase to what in was in 2020.
As part of measures to increase the number of mandated investors on the e-DMMS and reduce the quantum of unclaimed dividends, members of the CMC adopted the following measures:
i. Automation for mandating to e-DMMS
ii. Increase monitoring of adherence to procedures
iii. Increase awareness campaigns on the initiative
iv. A training session to be organized by the Central Securities Clearing System (CSCS); who will be supported by the e-DMMS technical committee, institute of Capital Market Registrars (ICMR) and Association of Securities Dealing Houses of Nigeria (ASHON).
v. Conduct of a study to determine the suitability of the CSCS to process dividends of investors in unlisted companies.
With reference to your last CMC press briefing meeting, you mentioned that it was the CMOs that were frustrating the e-dividend mandate and the Commission is going to sanction anybody found wanting. We need an update on that and ow many people have been sanctioned if any?
We have actually engaged with the industry to see were the issues are and part of the problem some of the operators had is the banking information that was given by investors before they can actually be over to the e-divdend mandate management system and secondly we have issues, there is a problem that it was manually done and we have investigated the issue with several operators.
We have engaged the Institute of capital market registrars to understand what the problem is. However, we have not at the moment sanction any capital market operator because we have gone to see what kind of issues they have and we found out they are only having certain types of issues, technical challenges.
The answer is that we have understood the problem better and we are working with the Institute of Capital Market Registrars to resolve this, also the identity management committee that we have just recently setup is actually looking at all these issues.
