Infractions: Court Dismisses BGL’s Case against SEC

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Goddy Egene
The Federal High Court sitting in Lagos has dismissed three cases filed against the Securities and Exchange Commission (SEC) by BGL Plc, its sponsored individuals and subsidiaries.

BGL Plc had taken SEC to court over the commission’s decision to suspend it from capital market activities for alleged infractions.

SEC had received complaints from 33 persons concerning their investment in the Guaranteed Premium Notes (GPN), Guaranteed Consolidated Notes (GCN), private placement and other schemes promoted by the BGL Group.

The crux of the complaints were centered on the inability of the BGL Group to meet its financial obligations to its investors under the respective schemes as a result of which they were paid neither the returns nor principal on their investment upon maturity.
These left the firm indebted to its investors to the tune of almost N5.7 billion.

SEC conducted an investigation into the activities of the BGL Group to ascertain the authenticity of the complaints.

Upon its conclusion of the investigation, the commission confirmed the complaints of the affected 35 persons and also observed that the BGL group had acted in violation of the provisions Sections 38, 60 (1), 61 (1), 160 and 161 (1) of the ISA 2007.

Other infractions observed during the investigation were breach of the provisions of Rules 3 (4), 22 (4), 34 (1e), 65 (5) and 60 (1f) of the SEC Rules and Regulations.

 Dissatisfied with the findings of the investigation and the inability of the BGL group to resolve the complaints, the commission suspended the group’s Managing Director,  Mr. Albert Okumagba   and some other officers as well as invited the group along with 31 other persons to appear before the Administrative Proceedings Committee (APC) of the commission.

Upon the conclusion of the proceedings a year later, SEC’s APC arrived at a decision  banning Okumagba and his deputy, Chibundu Edozie, from carrying out capital market activities for 20 years and ordered his companies to restitute investors over N2 billion.

However, the  BGL Group proceeded to the Federal High Court and instituted three cases. The first case  the suspension and sanctions pronounced on them by the commission on the grounds inter alia that the executive management committee of the commission is not the competent body to pronounce such sanctions. The second case sought, among others a declaration that the APC of SEC cannot adjudicate on the subject matter of the complaint in APC/1/2015 as doing so would violate the plaintiff’s right to fair hearing as enshrined in the rules of natural justice and guaranteed by the constitution.

 The third case sought, among others  an order prohibiting the commission from conducting a hearing on the complaints against them pending the hearing and determination of all the pending cases.
But in statement yesterday SEC said  The Federal High Court dismissed all the cases “for being incompetent.”