SEC: Zero-tolerance for corruption in the sector

Securities and Exchange Commission (SEC)

The famous slogan by President Muhammadu Buhari, “If we don’t kill corruption this corruption will kill us,” which gained traction during the political hustings in the run up to the 2015 general election, is the premise upon which the anti-corruption war of the current administration is being fought. Which is just as well.

Expectedly, one body which has also adopted the same mantra is the Security and Exchange Commission, SEC, the apex regulatory body for capital market operators in the country. The body has zero-tolerance for corruption and naturally expects every player in the sector to play by the rules

Thus it has had no qualms in enforcing its extant rules when the need arise, especially against operators deemed to have run afoul of the law.

No hiding place for errant capital market cabals

Report form correspondence authoritatively proven that SEC had turned the heat on some operators in the capital market in the last 18 months with a view to rid the sector of those perceived as a bad influence in the system.

Interestingly, those on SEC watch list had been those perceived in some quarters as sacred cows and the untouchables.

Expectedly, one of the case that served as a litmus test for SEC was its celebrated case with Albert Okumagba, the Group Managing Director of BGL Group.

SEC had suspended Okumagba and BGL from operating in the market a year ago, and has since been investigating the complaints. He was also removed as the President of Chartered Institute of Stockbrokers (CIS).

Okumagba was also banned from operating as a Registered Sponsored Individual with SEC.

It may be recalled that SEC had last year expelled the BGL Group from the capital market after receiving over 30 petitions from aggrieved investors who claimed to have been defrauded by the company.

The BGL Group was allegedly involved in N28.9bn fraud and malpractices for which the Economic and Financial Crimes Commission (EFCC) had arrested Okumagba.

Specifically, the commission had grilled Okumagba over alleged diversion of N28.9bn being proceeds of private placements of 4.3bn ordinary shares of 50k each at N7.00k per share in 2007.

The company, whose subsidiaries include BGL Capital, BGL Private Equity, BGL Security and BGL Asset Management, allegedly lured 50 investors from across the country into subscribing to the company’s shares, promising them options of liquidity and exit within two years.

According to report the investors were not able to liquidate their assets contrary to the promise made to them and that an alleged promise that BGL would be listed on the Securities and Exchange Commission two years after the offer in 2008 was not fulfilled.

According to SEC, in a bid to obtain justice for the complainants and grant all parties fair hearing, the matter was presented before the Administrative Proceedings Committee (APC) of the commission, which sat on February 6, 2016. During the proceedings various parties tendered testimonies and documentary evidence. SEC said upon the conclusion of the proceedings, its APC arrived at a decision, which has been approved by the relevant authority.

The APC decided that by their actions and/or omissions BGL Securities Limited, BGL Asset Management Limited, Okumagba, Edozie, 5th, 6th, 7th, 8th, 9th, 10th, 11th, 12th, 13th, 14th, 15th, 16th, 17th, 18th, 19th, 21st and 22nd respondents engaged in acts capable of adversely affecting the investing public’s image of, and confidence in the capital market.

However, the BGL Group, through its counsel, Mr. Kemi Pinheiro (SAN), on May 27, 2015, obtained an interim injunction by Justice Saliu Saidu, stopping SEC from effecting the ban.

But Justice Mohammed Yunusa of Federal High Court in Lagos had vacated the interim injunction barring SEC from expelling BGL Group.

With a prima facie case already established against the promoters of BGL Group, SEC handed down what some observers considered a poetic justice of sort.

According to a document obtained by The Nation, a summary of the decision of the SEC Administrative Proceedings Committee in the Matter of APC/1/2015: Rivers State Ministry of Finance & 31 Others V. BGL Plc & 31 Others, showed that the Commission received 32 complaints between 2012 and 2015 against the 1st to 4th respondents over certain conducts in relation to operations of their Guaranteed Consolidated Notes (GCN) and Guaranteed Premium Notes (GPN). Investigations revealed that the 1st to the 4th respondents had through the 5th to 32nd breached some provisions of the Investment and Securities Act (ISA) 2007 as well as the SEC Rules and Regulations, which resulted to a loss of about N5,769,993,553.67 for 32 innocent investors.

To ensure the innocent investors obtain justice; while also granting all parties fair hearing, the Commission invited all parties before its Administrative Proceedings Committee (APC). Having properly issued hearing notices, the APC sat on December 8, 2016 to hear the matter. In the course of the hearing, testimonies and documentary evidence were tendered by various parties.

Upon conclusion of the hearing, the SEC APC reached a final decision which has been approved by the relevant authority. Consequently, the Committee passed sanctions on Okumagba and several others.

Those slammed with life bans include Mr Albert Okumagba, the Group Managing Director, BGL Group and his deputy, Mr Chibundu Edozie.

Other officials of BGL sanctioned include Mr Peter Adebola, who was banned for five years, Joseph Ashley-Osuzoka was banned for four years with a fine of N100,000, Joshua Sesan Adetiloye and Ms Mshelia Bittinger were banned for one year respectively.

Others are Nkechi Azubuike, Victor Inyang, Hilary Eludu, and Andre Ewubare who were slammed with two-year ban with a fine of N100,000 each, while Anthony Nwozor was banned for one year with a fine of N100,000.

Also, Okumagba and Edozie were directed to pay N100,000 fine each, while BGL Assets Management Ltd and BGL Securities Ltd., were directed to pay N23.2million and N10.1million respectively. The circular stated that another BGL company, BGL Plc, was directed to pay a fine of N5million.

Share This!