Securities and Exchange Commission advises investors against multiple subscriptions

 

The Securities and Exchange Commission (SEC) has warned investors in the Nigerian Capital Market against multiple subscriptions for the same public offer.

Mr Naif Abdussalam, the Head of Corporate Communications of SEC, who said this in a statement  in Abuja, noted that anyone who makes multiple subscriptions would forfeit their investment.

Abdussalam said the SEC at its last Capital Market Committee meeting (CMC) approved the report of a market wide committee on formulating a uniform position for the treatment of multiple subscriptions to public offers.
“A circular by the commission stated that the Nigerian Capital Market cannot and should not be seen to reward the wrongful acts/illegality of the perpetrators.”
“This is with a view to ensuring the global sustainability of the Nigerian Capital Market’s integrity and reputation.”
“The circular observes that one major source of unclaimed dividend remains the use of non-existent identity to make multiple subscriptions to public offers.’’

According to Abdussalam, the committee unanimously agreed that the action of submitting multiple applications for the same public offer was in every consideration illegal.

He said the committee also agreed that the wrongful acts were carried out by the perpetrators under false presence.

Abdussalam said the report described two groups of investors involved in multiple subscriptions of which the first group (Group A) existed and the other (Group B) did not exist.

The first group joggled their names in different forms to purchase more than the permitted units of shares on offer.”

“The second group on the other hand is the class of investors that use fictitious names for the purpose of purchasing more than the permitted number of shares during public offers.”

“The report agreed that both groups have fraudulent intentions and their actions are collectively illegal.’’

Abdussalam, however, listed the recommendations approved by the CMC to include the followings;
That Group A be considered for a level of forbearance and given a grace period up to Sept. 1 to expressly prove their individual identities.”

“This will be subject to highest Know Your Customers’ (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 date, 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.”
“The transferred dividends will then be managed transparently in a separate basket under clear guidelines.’’
He said that for Group B, which referred to those securities with non-existent owners, its unclaimed dividends and related securities could not be ascribed to anyone.
Abdussalam said that both the unclaimed dividends and securities would also be handled similarly to that of Group A.
Going forward, anybody who engages in the wrongful act of Multiple Subscriptions for the same public offer shall be prosecuted.”
“The market shall put in place adequate processes, leveraging on technology, toward detecting and identifying such cases of multiple subscriptions in the future.”
“Consequently, all investors with cases of multiple subscriptions under Group A that are considered for forbearance should by this circular approach stockbrokers or registrars,’’ Abdussalam said.