SEC Moves against Flow of Illicit Funds into Capital Market


Goddy Egene

As part of efforts to identify investors properly, guard against flow of illicit funds into the capital market and address challenges associated with identity management generally, the Securities and Exchange Commission (SEC) has developed a standardised Investor’s Data and Consent Form to be adopted by all capital market operators(CMOs).

Identity theft is the deliberate use of someone else’s identity, usually as a method to gain financial advantage or obtain credit and other benefits in the other person’s name, and perhaps to the other person’s disadvantage or loss.

According to the Acting Director General of SEC, Ms. Mary Uduk, the form would assist CMOs in collecting and updating investors data as well as enable CMOs to obtain consent of investors for implementing capital market initiatives targeted at improving overall experience and participation in the capital market.

“We need to identify our investors, we need to know who is putting money in our market and who is not. That will also help us to take care of money laundering and other vices and people we don’t want in our market. That form is out there and we expect every stakeholder to look at it and make comments and other capital market operators so that we can use it to get information from investors and that information would be stored in data base protected under the law and used to ensure that we have unique identifier investors,” she said.

Uduke noted that identity management has been a problem not just in the capital market but in many sectors of Nigeria’s economy, assured stakeholders that the commission is handling it in the capital market.

“We are handling it, and that is why we came up with that form, that form has been exposed and we have asked the CMOs and other stakeholders to give us their comments on that form. We want to get as much information as we need from investors to be able to use it in the right way while also protecting that information,” she said.

Uduk, however, warned that the SEC would no longer tolerate investors buying stocks in fake names, terming it as illegal.

“For example, years ago, before the global financial crisis, there was lack of good identity management in the market and that made it easy for some people to buy stocks using multiple identities when companies were doing IPOs at that time. What has happened now is that we find it difficult to reconcile ownership of these stocks. That is why we have a window open right now for people who got stocks in multiple identities to regularise them.