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Tribunal orders BGL to pay N90 million over illegal sale of shares

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The Investment and Securities Tribunal (IST), Lagos, has ordered a stock brokerage firm, BGL Securities Limited, to pay a senior lawyer, George Etomi, and Helmsworth Investment Limited, the sum of N90 million, being the proceeds of their shares in National Sports Lottery Plc, illegally sold by BGL.

The tribunal also awarded N5 million general damages against the brokerage firm. The judgment sum is to run at six per cent interest rate yearly until it is liquidated.

The tribunal’s verdict is sequel to suit number IST/LA/OA/01/2014 filed by Helmsworth Investments Limited and Etomi as first and second claimants. The defendants are BGL Securities Ltd, Premier Holdings Limited and Noel C. Okorougo.

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The tribunal was presided over by Hon Jude Udini. Other tribunal members include Hon Nosa Osemwengie, Hon Emeka Madubuike, Hon Edward Ajayi, and Hon Mamman Zargana.

The claimants stated in their averments before the tribunal that sometime in 2006, the second claimant, Etomi rendered legal advisory services to the 3rd defendant, Okorougo by representing his interests in National Sports Lottery. Rather than pay cash for the services, the third defendant offered Etomi five million units of shares out of his shares at NSL as full and final settlement of Etomi’s legal fees.

Etomi and his law firm reluctantly accepted the offer, having complained that the shares did not commensurate with work done. After the services, Etomi requested Okorougo to transfer the shares to the 1st claimant, Helmsworth Investment Limited.

The 3rd defendant carried out the instruction and a share certificate was issued to that effect. The defendants subsequently sent account-opening forms to the 2nd claimant for the purpose of opening the Central Securities Clearing System (CSCS) in the custody of the first defendant.

Things however took another turn sometime in 2008 when one Clara Mshelia, a staff of the 1st defendant called the 2nd claimant to come and collect a cheque of N10 million, proceeds from the sale of his N5 million shares in NSL Plc. But Etomi rejected the money, saying he did not instruct such a sale.

“The second claimant in response unequivocally informed Okorougo that since the shares had been duly transferred to the 1st claimant as agreed, he had no right whatsoever to give instructions to the 1st defendant for the sale”, and therefore rejected the N10 million.

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In its judgment, the tribunal presided over by Hon Udunni adopted the lone issue formulated by both parties in the resolution of the case, which was “whether, considering the facts and circumstances of this case, the claimants have successfully probed their entitlement to the reliefs sought in the amended originating application”.

Hon Udunni answered the question in the affirmative. He identified the areas where there was a convergence in the positions held by the parties, such as transfer of shares, sale of the shares, transference of the proceeds to the 3rd defendant, re-crediting of five million shares to the claimant’s account, and the directive of SEC to the first defendants to pay N90 million, being the amount the shares was sold to the claimants.

He said one area of divergence is the ownership of the five million units of NSL shares. He noted that having allotted shares and issued a share certificate, the 3rd defendant cannot turn around to claim ownership.

“A share certificate is defined under Section 315 of the Investments and Securities Act 2007 as an instrument of a body corporate certifying that the person named is entitled to a certain number of shares and is a prima facie evidence of his ownership whether electronically expressed or otherwise as may be approved by the commission and kept, lodged, or stored with a licensed depository or custodian company following the provisions of this act,” he held.

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Udunni said the position of the 1st defendant revealed some contradictions. “While in one breadth, the writer admitted that the shares were allocated to Helmsworth Investments, in another breadth it is stated that no shares of NSL Plc were subscribed to, nor paid for by Helmsworth. The question is, how do you allot shares to a person who did not subscribe to such shares,” he asked.

The tribunal chairman further said: “We could not understand how the 1st defendant who claimed that at all times material to the sale of the shares, it acted for and on behalf of the 1st claimant could turn around and remit proceeds of the sale of the first claimant’s shares to the 2nd defendant on the instruction of a third party.

“The argument that the 1st defendant was acting under the instruction of the 3rd defendant when it sold and remitted the proceeds of the 1st claimant’s shares to the 2nd defendant is surprising because the Tribunal, having examined all the documents tendered by both parties is unable to find anywhere both as a matter of fact and evidence where the 1st claimant appointed the 3rd defendant as its agent, or where it delegated or donated its power to the 3rd defendant to deal with the five million shares. Therefore, it is our view that this contention not being supported by evidence must fail”.

The Tribunal stated that the case of the claimants against the 1st defendant succeeds. “By the evidence adduced by the claimants at the hearing of this case, the claimants have proved their case and their entitlement to the reliefs sought in their amended originating application,” the chairman concluded.

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