May 20, 2019/Nairametrics
No fewer than 33 persons have been deemed unfit to engage in the Nigerian stock market business. Consequently, the Nigerian Stock Exchange (NSE), has blacklisted them as a result of alleged corruption and other offenses.
The ban was placed on the 33 persons for various crimes ranging from unauthorised sale of clients’ shares, diversion of funds, professional misconduct, and aiding and abetting criminal activities.
The Details: Those on the “blacklist” include stockbrokers, accountants, directors, compliance officers, registrar, information and technology specialists among others. A breakdown showed that stockbrokers comprise more than half of those blacklisted, while there is also a significant number of compliance officers.
It would be recalled that The Exchange, had in December last year, amended its rules to enable it to open a ‘blacklist’ for recording corrupt persons. The amendment as at the time was approved by the Securities and Exchange Commission (SEC).
What does this mean? Any blacklisted person shall no longer be entitled to the privileges, services, recognition, or access to the Exchange and its facilities. Such a person shall also not be permitted to deal/transact with or be employed by a dealing member or person.
The “blacklist” rule applies to all dealing member, an authorised clerk, an employee or director of a dealing member, a sub-broker, or any other capital market operator.
How the embargo can be lifted: According to the NSE rules, any person blacklisted by the Exchange may, however, apply to the Exchange for reinstatement after the expiration of the blacklisting period imposed by the Exchange; or where the blacklisting is not for life, a reasonable period has elapsed where no period is specified by the Exchange.
Any person applying for removal from the blacklisting and reinstatement into the capital market must “provide compelling reasons” in support of his or her application.
Meanwhile, the NSE-through it Disciplinary Committee and Securities and Exchange Commission (SEC)-through its Administrative Proceedings Committee (APC) run an active investigative mechanism that seeks to uncover malpractices, sanctions indicted operators and restitutes affected investors. However, both NSE and SEC lack prosecutorial powers.
Capital market regulators have recently been able to bridge the gap between their investigative powers and prosecutorial powers through a Memorandum of Understanding (MoU) with the Economic and Financial Crimes Commission. The MoU shall allow collaborative efforts on information sharing, investigation, prosecution and enforcement.