Securities and Exchange Commission (SEC) said on Wednesday that it would begin to punish investors in the Nigerian capital market who deliberately subscribe more than once to the same public offer.
The punishment will include prosecution and a possible forfeiture of those investments, SEC warned in a mailed statement.
The Commission says this is a major decision of its last Capital Market Committee meeting (CMC), which “approved the report of a market wide committee on formulating a uniform position for the treatment of multiple subscriptions to public offers.”
The SEC is concerned that the use of non-existent identity to make multiple subscriptions to public offers has contributed to the huge unclaimed dividend challenge, which it is trying to tackle.
It noted that the CMC therefore unanimously agreed that “submitting Multiple Applications for the same Public Offer was, in every consideration, illegal; and that the wrongful acts were carried out, by the perpetrators, under False Pretence.”
In a circular, SEC maintained that, ”the Nigerian Capital Market CANNOT and should not be seen to reward the wrongful acts/illegality of the perpetrators. This was with a view to ensuring the global sustainability of the Nigerian Capital Market’s Integrity and Reputation.”
The Capital Market Committee report has observed two groups of investors involved in multiple subscriptions. The first group (A) of investors actually existed but joggled their names in different forms to enable them purchase more than the permitted units of shares on offer.
The second group (B) was the class of investors that did not actually exist but used fictitious names for the purpose of purchasing more than the permitted number of shares during public offers.
The report, however, was of the opinion that both groups had fraudulent intentions and their actions were collectively illegal.
At the meeting, participants recommended that, Group ‘A’, as highlighted above should be considered for a level of forbearance by giving them a grace period up to 1st September, 2017 within which to come forward and expressly prove their individual identities, subject to highest KYC criteria, to be defined by the SEC.
“Those owners, whose identities are established, would then be allowed to consolidate their accounts. After the expiration of the timeframe, unclaimed dividends, traceable to this category that have not been identified and consolidated, along with their securities shall be transferred to the Nigerian Capital Market Development Fund to be managed transparently in a separate basket under clear guidelines,” SEC said in the statement signed by Naif Abdussalam, its Head Corporate Communications SEC.
But for category ‘B’ which refers to those securities with non-existent owners, the unclaimed dividends and related securities of this category cannot be ascribed to anyone, the Committee decided.
“Therefore, both the unclaimed dividends and securities shall be transferred to the Nigerian Capital Market Development Fund referred to in (i) above.”
It was also resolved that, going forward, anybody who engages in the wrongful act of Multiple Subscriptions for the same Public Offer, will be prosecuted.
It was also agreed at the meeting that the Market will put in place adequate processes, leveraging on technology, towards detecting and identifying such cases of Multiple Subscriptions, in the future.
“Consequently, all investor with cases of multiple subscriptions under Group (A) that are considered for forbearance should by this circular approach stockbrokers or registrars,” the regular advised.
Onyinye Nwachukwu, Abuja
