Stakeholders seek probe into infractions of operators, regulators

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Stakeholders seek probe into infractions of operators, regulators

•'Probe should not be used to further destabilise the market'Infractions of regulators, market players and operators of the capital market were yesterday adjudged to have precipitated the crash of equities as stakeholders sought a deep inquiry into the level of culpability of parties.The probe being undertaken by seasoned stakeholders, retired and practicing, is to investigate share price manipulations and insider dealings that contributed to the crash of the Nigerian stock market, according to Arunma Oteh, director general of SEC, in an interview with the Financial Times and reported by BusinessDay on Thursday.  BusinessDay has, however, learnt that the Administrative Proceedings Committee (APC) of SEC had since commenced probe into all cases of market manipulations that shocked the country and consequently sent share prices flat. The market closed at N5.7 trillion yesterday as against a high of N13.2 trillion in early 2008.It was gathered that SEC's transformation agenda part of which informed the setting up of the APC, would focus on three key issues:  •investigate and met out punishments to all those who are found guilty of manipulating the market with a view to clear out all negative news from the market; •strengthen market trade groups to act as monitors in the market (they are more likely to know about what is going wrong in the market) before the regulators know about it; and•implement the Dotun Sulaiman 'capital Market Review Committee' recommendations fully.However, stockbrokers who reacted to the news of SEC's probe of market infractions noted that both the operators and regulators should be blamed for the market crisis.  The stockbrokers unanimously heaped the blame on the regulators and other market players including the issuing houses."The regulators should also take part of the blame because they have representatives on the trading floor who should have asked questions when they noticed unusual trading volume or movement of share prices," a stockbroker said.  Another market operator who would not want to be named told BusinessDay that "SEC also benefited from the irregularities in the market because we were paying transaction fees to them from proceeds of all transactions on the stock exchange. They have the machinery on ground which they could not utilise" Market analysts who spoke to BusinessDay also found the issuing houses culpable on the grounds that they created an illegal secondary market for companies that are not quoted on the stock exchange especially when such companies undertook private placements. Former president of the Chartered Institute of Stockbrokers, Dipo Aina, said: "I hope the regulators would have the courage to follow through the investigation because it is industry wide. The operators and regulators should be able to tell the world what they know about the issue"   Sunny Nwosu, national coordinator of Independent Shareholders Association of Nigeria (ISAN), told BusinessDay the problem of equity crash in the Nigerian capital market has become historical even as he advised that the probe should not be used to further destabilise the market. "Let SEC set up a genuine probe to look at the issues and sanction those who are culpable but it should not be used to further destabilise the market. In the United States, 150 banks had gone under and their economy has not been destabilised, the regulators should do a thorough job so that confidence would not be further eroded," he added. Yakubu Adams, a stockbroker, said whatever needs to be done to restore confidence in the market should be done but pointed out that there exists a law that regulates the capital market which the regulators oversee. "We should not give the impression that only the stockbrokers are responsible for the market crash. The rules have always been there and I believe the probe would be done to enforce the rules because that is the only way the players can benefit. We should move away from the issue of blame game and any policy on the side of the regulator should focus on how to restore confidence in the market" he added.

Source: latest news, breaking news, business, finance analysis, comments and views from Nigeria :: Businessday

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