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Kudos, knocks as SEC threatens to revoke registration of experts

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SEC, in a circular on Monday, said it plans to revoke the registration of about 400 capital market experts that fail to comply with its directive to provide updated information of their firms by July 31st.


Capital market stakeholders have expressed divergent views on the threats by the Securities and Exchange Commission (SEC), equities market regulator, to revoke the registration of about 400 market experts that failed to provide companies information latest by July 31st.
   
While some argued that their exit from the market will not have any negative effect but would restore sanity in the market considering the obstacles their non-compliance have caused, others insisted that any step taken to blacklist or suspend any firm at this point in time when the market is experiencing a gradual recovery. This, they argued, would send a wrong signal to both local and foreign investors.

SEC, in a circular on Monday, said it plans to revoke the registration of about 400 capital market experts that fail to comply with its directive to provide updated information of their firms by July 31st.

According to a circular from SEC, “any firm whose response is not received within this time frame would be considered inactive and the SEC would exercise its power to revoke its registration.”
   
But market operators who spoke with The Guardian, like the Managing Director, First Registrars, Bayo Olugbemi, argued that any operator that refuses or fails to provide information has no business being in the market under the SEC’s rules.
   
“One of the operators’ registration requirements is continuous information. In fact, some of us do render quarterly returns. Any operator that refuses to or failed to give information has no business being in the market according to SEC’s rules. Nothing will negatively happen if they are taken off the market. It will only bring sanity,” he said.
   
Corroborating his view, the President, Association of Stockbroking Houses of Nigeria (ASHON), Patrick Ezeagu, explained that SEC is the apex regulator of the capital market, therefore, all market participants are required at all times to conform to the directives.
   
He submitted that the exercise would sanitise this group of market stakeholders so that only those that play by the rules will remain in the market.“By forewarning those market experts on the impending sanction and giving a time limit within which to regularise or be penalised, it shows that SEC is as a corrective rather than a bullying regulator. It behooves on those affected to quickly do the needful before the deadline in order to avoid being sanctioned.
   
“As to the impact on the market, that will depend on the number of those that will not meet the deadline and their respective roles. My thinking is that the exercise will sanitise the number of experts so that only those that play by the rules will remain and be patronised by market participants.”
   
However, the Registrar Chief Executive, Institute of Capital Market Registrars, Walker Ogogo, condemned the move, noting that such pronouncements and actions is capable of eroding investors’ confidence.
   
Ogogo maintained that with the renewed investors’ confidence witnessed in the market in the past few weeks, there was a need for regulators and other market players to exercise caution on any directive that would further cause apathy in the market.

He therefore suggested that SEC should organise a forum for a round table discussion with this group of market participants or on an individual basis educate them on the need to update their information.
   
Furthermore, Ogogo added that any step taken to blacklist or suspend any firm at this time when the market is experiencing a gradual recovery would send a wrong signal to both local and foreign investors.
   
“Without this group of people in the market, market procedure will not be completed, especially when it comes to public offering, the reporting accountants, the solicitors, they are part of the market. For loans, debentures, trustees must be there. They are key stakeholders. If they were not in the market, the impact would be negative.

   
“They should invite them for a round table discussion or meet with them individually to educate them on why they should update their information. Revoking their registration would send a wrong signal to the market. They should encourage them to update their information.”
      
SEC in its circular had noted that a large number of the capital market experts or comprising Reporting Accountants, Solicitors, and Estate Surveyors/Valuers and a host of others fail to respond to the request for information on their businesses.
   
“The SEC Nigeria pursuant to the powers conferred on it by the Investments and Securities Act (ISA) 2007 had directed all capital market to provide updated information of their companies/firms in December 2016 and February 2017,” it recalled.



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