SECURITIES dealers, under the aegis of Association of Securities Dealing Houses of Nigeria (ASHON), have condemned the act of non-compliance to capital market rules and established practices in the bid of mobilising funds to meet the new capital requirement as directed by the Central Bank of Nigeria (CBN).
In a statement jointly signed by the Chairman of ASHON, Sam Onukwue and Executive Secretary, ASHON, Athan Ogbozor, the association said it observed that in a desperate move to mobilise funds to comply with the new capital requirement as directed by the CBN, some banks have devised means of bypassing stockbrokers as receiving agents.
According to the dealers, these banks have handed over their shareholders registers to their staff, including drivers and receptionists to issue and receive share subscriptions forms to investors, thereby bypassing stockbroking firms which are the registered receiving agents.
Such completed offer forms, it said, are then passed directly to the bank, its branches and subsidiaries (including registrars).
The statement noted in addition, the banks have opened unapproved dedicated portals as a marketing strategy to mine investors’ information and constrain investors to domicile their accounts with their subsidiaries instead of their stockbrokers.
The statement read: “By these devices, opportunities for fair marketing have been denied stockbrokers. This act is at variance with the acceptable procedure where stockbrokers have the primary duty to market shares and offer investment advice to investors.
“The ongoing unorthodox channels of share subscription deny innocent investors of opportunity of making appropriate investment decisions in line with their investment objectives, risk tolerance, time horizon and source of fund, amongst others.
“We also fear the likelihood of abuse of the process as in the 2005 bank recapitalisation where stockbrokers were wrongly blamed for infractions committed by banks.”
ASHON, however, advised issuers and investors to deal directly with trading licence holders who are members of ASHON in order to be availed sound professional advice ahead of any share subscription. The firms are duly registered and regulated by the SEC and licensed by recognised securities market platforms.
The statement noted that the list of recognised trading license holders or dealing-member firms is available on the websites of Securities and Exchange Commission (SEC), Nigerian Exchange Limited (NGX) and ASHON.
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