Stockbroker’s N10 Billion Scandal Rocks Stock Market

 Stockbroker’s N10 Billion Scandal Rocks Stock Market

SEC, NSE move to restore confidence
Industry regulators are currently struggling to restore investors’ confidence in the capital market, following what stakeholders described as poor handling of infractions and enforcement of discipline among operators.
The development came as a stock broking firm, Partnership Securities Limited (PSL), and its sister companies – Partnership Investment Company Plc; Life Care Partners Limited; and SBDC Microfinance Bank Limited, are embroiled in alleged N10 billion scandal, based on official estimates, relating to diversion and misappropriation of funds.
Given the level of the infraction by some operators, analysts are puzzled as to why the regulators, the Securities and Exchange Commission (SEC); the Nigerian Stock Exchange (NSE); and the Central Security Clearing System (CSCS), are unable to effectively deal with such sharp practices.
According to reports, “Nigeria’s efforts to grow its capital market are dependent upon having confidence in the market, institutions and regulators.”
According to petitions to the regulators, the N10 billion quoted involved a series of transactions on behalf of various clients in which the Chairman and Chief Executive Officer of Partnership Securities, Victor Ogiemwonyi, is identified as the chief protagonist.
But the unwholesome practices came to a climax in the case involving approximately 96,077,872 shares of Ecobank Transnational Incorporated (ETI), valued around N1.24 billion and an additional $80,000 from accrued dividend owned by a former ETI chief executive, Arnold Onyekwere Ekpe.
Confirming the imbroglio, Ekpe’s lawyers, Sofunde Osakwe Ogundipe & Belgore, told The Guardian that based on previous relationship, the client gave PSL an exclusive mandate to dispose of his shares in ETI after retiring from the company at N16 per share within three months spanning July to September, 2016.
In compliance with the CSCS rule for such transactions, Ekpe, according to the documents obtained by The Guardian, filled in a number of forms including the CSCS account creation form, client’s bank details, and the investor’s bank account update form for direct settlement, all of which contained his bank details.
Under the CSCS rules, cash payments from such NSE Automated Trading System (ATS) are automatically made into the client’s account, except if declined by the client and then paid into the broker’s account in compliance with Rule 16:3 of the Direct Cash Settlement.
Sub-section C2 states: “Any client that declines direct cash payment into its account provided to CSCS shall notify it of that fact by completing a direct cash settlement notification form in which the client shall make its preference known.”
It is unclear how the CSCS got into paying the proceeds into Ogiemwonyi’s account rather than Ekpe’s, thereby exposing regulatory weaknesses in the operation of the ATS and DCS, as the scheme is meant to stamp out misappropriation of investors’ funds by stockbrokers.
Unable to defend its negligence, a top CSCS official, who preferred anonymity said “I cannot speak to you on it. We are not yet at that stage to issue a press release, it is inconclusive for now. Whenever we are through, we will speak. The case just came up, it just came to light.”

LTV

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