NSE expels 38 stockbroking firms

The Nigerian Stock Exchange (NSE) has expelled 38 stockbroking
firms from the capital market.

Regulatory documents obtained by The Nation at the weekend
indicated that the stockbroking firms were expelled in two batches
within the past six months. The latest expulsion brought the number
of stockbroking firms expelled over the past two and half years to
more than 120.

The expulsion of the dealing members came after exhaustive
review process by the management and council of the Exchange, after
which the licenses of the dealing firms were revoked. The final
expulsion order was issued by the National Council of the Exchange,
its highest administrative organ.

The expulsion was due generally to acute level of inactivity,
irredeemably weak operating status and infractions against the
extant rules at the Exchange. Poorly structured dealing firms had
been identified as one of the weak points of the market, leading
the Exchange to embark on an intensive house-cleaning exercise.

The expelled dealing firms included Mercov Securities Limited;
Resano Securities Limited; Transafrica Financial Services Limited;
Andruche Investments Plc; Angela Eccles Limited; Associated Trust
Investment & Finance Limited; Beaver Securities Limited;
Betraco Securities Limited; Cobal Ventures Limited; Corporate Focus
Securities Limited; Financial Intermediaries Limited; GF Securities
Limited; IB Finance Limited; Integrated Securities Ltd; Integrated
Ventures Nigeria Limited; Intercommerce and Consultant Limited;
Investment & Capital Development Company Limited and Investment
Trust Company Limited.

Others included Kamrash Securities Limited; Lakeside Asset
Management Limited; M & F Investment & Securities Limited;
Milestone Investment Services Limited; Millennium Investment Trust
Limited; Moji Securities & Investment Nigeria Limited; Morgan
Trust Asset Management Plc; Multibank International Securities
Limited; Nationwide Finance and International Securities Limited
and Novelty Investment Limited.

Also expelled were Optimus Finance and Securities Limited; Pabod
Finance & Investment Company Limited; Pabofin Securities
Limited; Path Securities & Investment Ltd; Shiroro Finance Ltd;
Tassel Finance & Investment Company; Unique Securities &
Finance Services Limited; Upper Credit Securities and Investments
Limited; Wellsfargo Capital Limited and Westland Investment
Ltd.

With the revocation of their licences and expulsion, the firms
shall not be able to trade on the Nigerian stock market and other
international markets that Nigeria has Memorandum of Understanding
(MoU) with. Nigerian capital market authorities have standing
bilateral agreements with several other jurisdictions, including
Morocco, Angola, China, Ghana, Kenya, Malaysia, Mauritius, South
Africa, Tanzania and Uganda.

With the expulsion, investors who have their investment accounts
with the expelled dealing firms will be required to move their
accounts to other functional stockbroking firms.

Also, directors, executives, top management and other employees
of the expelled firms will not be able to secure any employment in
the capital market without prior clearance and written consent of
the Exchange.

“Dealing members are strongly advised not to engage in any
activity with the above mentioned firms,” the Exchange stated in
the expulsion circular signed by Olufemi Shobanjo, Head of Broker
Dealer Regulation Department at the NSE.

Under Rule 6.12 of the Rulebook of the Exchange, 2015, members
of the Exchange are disallowed from employing any of directors,
authorised clerks or other persons including principal officers
such as the chief executive officer, chief finance officer, chief
compliance officer and chief risk officer, who have been indicted
by the Exchange or the Commission without prior regulatory
approval.

Also, the rule disallows other stockbroking firms from employing
any person who was an officer or employee of a stockbroking firm or
dealing member expelled from the Exchange; any person expelled, as
an authorised clerk or its equivalent, from any other exchange; any
person refused admission as a member of the Chartered Institute of
Stockbrokers or any person expelled from its membership; any person
expelled as a member of any professional association or institute
and any person who is insolvent or has been convicted of theft,
fraud, forgery, or any other crime involving dishonesty.

The Rulebook of the Exchange 2015 provides that: where the
Exchange revokes a dealing member’s license, the Exchange shall
immediately commence the process of expelling such dealing
member.

Besides, the rules empower the NSE to suspend any authorised
clerk or revoke the registration of any authorised clerk, who has
breached any rules or regulations of the Exchange or is found to be
complicit in any breach of such rules or regulations.

Also, suspension of any stockbroking firm by the SEC will lead
to immediate suspension by the NSE while revocation of any broker’s
registration will lead to expulsion of the firm by the NSE.

“Without prejudice to all the remedies open to the dealing
member, where a dealing member is suspended by the Commission, as
soon as the Exchange is notified, it shall immediately commence the
process of suspension or expulsion of the dealing member.”

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