IST awards N3m cost against Meristem Securities for negligence

THE Investments and Securities Tribunal (IST) sitting in Abuja has awarded N3 million general damages against Meristem Securities Limited for losses and hardship suffered by a capital market investor due to negligent conduct.

Delivering judgment in the case instituted by Maj-General Steven Guar (rtd.) against Meristem and Securities and Exchange Commission (SEC) as defendants/respondents, the Tribunal ruled that the preponderance of evidence before it showed that Meristem Securities Limited failed to discharge the duty of care required of it to the investor who is its client.

Guar had sued the company claiming N30 million as general damages and N25 million as special damages to compensate for the loss of share certificates he deposited with the company for verification and dematerialization in 2008 but which the company claimed to have lost without informing him of the loss until 2014.

According to Acting Director of Communications if IST Kenneth Ezea, Guar said it was only in 2014 that he read about the loss from the company’s reply to a regulatory query from SEC where they claimed his share certificates were lost in transit between their Kaduna and Lagos offices.

The Applicant also complained that Meristem Securities Limited failed to account for the whereabouts of another 50,000 units of Access Bank Plc shares he bought through it in an Initial Public Offer (IPO) in 2004.

According to the particulars of the case, Guar had some time in 2004 bought 50,000 units of Access Bank Plc shares through Meristem Securities Limited and gave his office address as Jos, Plateau state.

From that time, he did not hear anything again about the shares allocation/allotment nor was a share certificate delivered to him until 2012 when he accidentally received a dividend bonus certificate issued on the shares in 2008.

He thereafter made inquiries and got to know that his address on the shares subscription form was changed to another address in Ikoyi Lagos, belonging to the company was where his dividends, bonuses and letters were channelled.

He demanded from the company the original certificate of the shares as well as the other bonuses and dividends that had accrued, which they failed to oblige.

Also in 2008, the Applicant handed various share certificates of different companies in which he held shares Meristem to take to the Central Securities Clearing System (CSCS) in Lagos to verify, dematerialize and credit into his account only for the company to fail to account for the whereabouts of those other share certificates.

After failing to resolve the issues even with the intervention of SEC, Guar approached IST seeking eight declarative remedies including an order that he was entitled to know the whereabouts of his share certificates; that the certificates be returned to him and that the withholding of dividends accrued from his 50,000 units of shares till date was illegal.

He also sought an order to compel the SEC to direct Meristem Securities to regularize documentation of his shares with his Registrar and consolidate his accrued dividends, bonuses and interest, among others.

On their part, Meristem Securities Limited told the Tribunal that the share certificates were lost in transit between their Kaduna and Lagos offices.

However, the client proved before the Tribunal how the value of the shares eroded drastically during the market tumble that took place.

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Delivering judgment, the Tribunal Presided by Hon. Member Jude Ike Udunni said it was inclined to award general damages against the 1st Defendant because the Applicant suffered some losses and hardship as a result of the conduct of the company.

It further ordered the company to take immediate steps to ensure that all shares, dividends, and bonuses accrued and still outstanding to the Applicant be credited to his CSCS account.

SEC, being the 2nd defendant was not found wanting in its handling of the matter when it was reported to it.
Other Members of the Tribunal on the panel are – Abubakar A. Ahmad, Albert L. Otesile, Emeka C. Madubuike and Kasumi G. Kurfi.