Exploit Whistle-blowing Policy to Report Capital Market Infractions, SEC Tells Operators


Ndubuisi Francis in Abuja

Securities and Exchange Commission (SEC) has urged capital market operators to make use of the commission’s whistle-blowing policy and report any infraction in the market for immediate actions.

SEC Acting Director General, Ms. Mary Uduk, who made the call, also assured investors that the commission is committed to ensuring that suspicious transactions are not allowed in the market.

Reacting to questions during a two-day international capital market conference organised by the commission in collaboration with the Department of Finance, University of Lagos, Uduk lamented that the private placement bubble happened with the connivance of many market operators who encouraged issuers to take advantage of loopholes in the relevant investment laws at the time

SEC, in a statement by the its spokesperson, Efe Ebelo, said Uduk recalled several efforts and appeals to such issuers, to list their shares without success, stressing that market operators encouraged private placements knowing that the law did not allow the SEC to regulate private companies.

“Insider trading is what we have to prove. A lot of us are in the market and we have whistle-blowing mechanism. It is the operators who will be in a better position to know and report such infractions. For those that have been reported to us, we have been carrying out investigations and once we have evidence we will invite them and also refer them to the relevant authorities

“With the whistle-blowing provision, we have always asked operators in the market to come to our aid if they find any unwholesome activity going on. It is our market and so we all have to do our bit. The market should not be left to us alone; you need to provide information for us to take the necessary actions.

“Anyone that is caught engaging in any activity that is against the laid down rules, be rest assured that such an operator will be made to face the full wrath of the law,” she said.

She lamented a situation where many private companies took advantage of gaps in Nigerian laws, especially between 2007 and 2008 to defraud many investors, by embarking on private placements, with promises to list the shares for trading on the Nigerian Stock Exchange (NSE), when in reality they had no such intention.

Uduk urged operators to cooperate with the commission for the good of the market and the economy, noting that “it is our market, please let us join hands and revive this market.”

She called for collaboration to sanitise the market, urging them to bring incidences of market abuse to the attention to the commission and enjoy protection under the law.

Uduk said the SEC has been doing its best to ensure that offenders are not left off the hook, adding that the commission is collaborating with EFCC and the office of attorney general to be able to do much.

The acting DG said the commission also has the complaints management framework that enables investors to know where to lodge complaints and how long it takes for such complaints to be resolved and for those of the investors that are averse to risks, they are advised to get their financial advisers to tell them where to invest.

She stated that in doing all these, SEC was advising retail investors to invest in Collective Investment Schemes and Mutual Funds because those are managed independently by professionals and are diversified thereby reducing risks.

The SEC DG also implored investors to take ownership of their investments, admonishing them to be able to monitor their investments, attend annual general meetings as well as read the annual reports sent out to them.

She assured that the commission was committed to protecting investors and would keep working on extant rules and the possibility of amending them when the need arises

According to her, SEC is desirous of more transparency in the market so that investors would feel comfortable while the market could be better.