Anatomy of SEC’s capacity building for the financial press

Involvement in 2023 stockbrokers’ conference 

I was privileged to be one of the discussants in a session during the recent annual conference of Chartered Institute of Stockbrokers (CIS), held in Abeokuta last month, apart from serving as a Rapporteur as usual. A session was created to enable some of us that crossed the carpet from different backgrounds, ranging from Law to Journalism to discuss our motivations to become stockbrokers and how the profession has enhanced our career paths. As a parting question, the moderator, Dr Mohammed Momoh,  asked each of us what should be done to improve the training of stockbrokers. My response was totally different. I seized the opportunity to appeal to the market regulators and operators to do a lot more in the training of financial journalists. These are the media professionals that report the activities in the capital market. Their stories and analysis can make or mar the market. At the basic level, the government, market regulators, either the apex regulator or Self-Regulatory Organisations, market operators, investors and analysts consume media reports for sundry reasons.

Financial  Press as critical stakeholder 

From the perspective of the constitution, the press is the watchdog of the society. They are to hold those in public office accountable through professional reportage of their activities. The press informs, educates and entertains. The myth about this great profession is that a journalist does not need to be a specialist in finance and investment to report and analyse the capital market. He does not require a strong background in medicine to report on healthcare and the same applies to other sectors. This is why journalism is called an eclectic profession just as lawyers call theirs  sui generis. This means the possession of a broad-based knowledge. Journalists are not magicians and they need not possess extra sensory perception. All they do is to gather information from authentic sources, speak to experts and be very careful not to be misled by pseudo-experts or those who want to exploit inadequate knowledge of a journalist about a subject and exploit this for selfish interest. Journalists play vital roles in every society. They set the agenda on any issue and determine which one to be given prominence at any point in time. Every media organisation has an operational philosophy and editorial policy. This manifests in the way they treat news, including their styles. Some media houses appeal to reason while some appeal to emotion. For instance, two journalists may have the same information about a company that has just laid off 30 percent of its staff. While the first Media house  casts a headline: “Company X downsizes 30 percent staff”, the other one may come up with a screaming headline: “Earthquake claims 30 percent staff in company X”. The two captions are correct but one is sensational. Credibility is the hallmark of a responsible media and this imposes on every journalist the need to ensure accuracy of facts and sanctity of balanced reports by talking to all the parties. 

A serious journalist is a researcher and must be on top of any story he undertakes to publish or air. The popular saying in the newsroom is that bad news is good news. But there is development journalism and what we call self-censorship when the media considers the far-reaching damages that a story can cause and either moderates it or kills the story on its own. 

Stock market reporting and its burden

Of all the desks in the media houses, the most challenging is arguably  that of finance, particularly the capital market. A capital market correspondent must keep tabs on all the sectors in the economy as companies are quoted across the sectors. While an insurance reporter is primarily concerned with the insurance sector, his colleague on the capital market beat, on the other hand, must know what drives the share prices of insurance companies on a securities exchange, how government policies affect the quoted companies’ performance  and the companies’ compliance with the Post Listing Requirements of a securities market, amongst others. New products are introduced into the market daily and technology is fast shaping all the market activities. The financial press must be on top of this. Are there regulatory lapses? What about infractions by market operators? What are the pain points of investors? How does boardroom intrigues affect the fortunes of shareholders in a quoted company? How many times have you woken up to see some headlines such as: “Investors lose N100 billion in Three Trading Days” and similar captions in the newspaper or electronic media on daily basis for almost one week? Whether the caption is right or wrong is not an issue for debate. It is a question  of news judgment which lawyers call legal opinion. The same story could have been captioned: “Bears rule trading, depress Share Prices”. Another reporter could peg it from the angle that many investors are taking advantage of share glut to increase their portfolio; some could dig into the profile of the buyers and sellers to know their motives. One thing is indisputable, there cannot be transactions without buyers and sellers and the intersection of demand and supply leads to price discovery. In basic economics, a rational buyer buys low, a rational seller sells high. The critical issue is the depth of the knowledge of those who report the market. They need to be exposed to some basic knowledge of the market activities to enable them to ask the right questions and be more dynamic in their news judgment. The quality of stories they push to the public impact investor confidence and market integrity. It is like a crime to tell a journalist how to write his story but the way to manage them is to provide accurate information and explanation. Every Editor wants what is regarded as a strong copy. But such copies do not have to be sensational or negative at all times. Sensational stories on the market can cause reputational damage for the regulators and operators  and cast aspersions on market integrity. This is where training of capital market correspondents should be accorded priority. There is the popular saying that you cannot give what you do not have. 

SEC to the rescue …

There is a dearth of knowledge in the financial press as new products and services are emerging in a near-exponential progression. There is a compelling need to equip the financial press that intermediates between the market and the investing public. I was thrilled to serve as an observer at a recently concluded training organised for the Capital Market Editors by Securities and Exchange Commission (SEC) at its Zonal Office in Lagos. The uniqueness of the training is the deliberate decision to take them through some technical issues such as: “Basic Operations of the Capital Market”; “A-Z on Public Offering and Crowdfunding”; “Compliance and Regulatory Environment in Nigeria”; “Role of Fintech in the Financial Market/Capital Market”; “Fintech Modalities and VASP Regulations in the Capital Market”; and “Typologies and AML/CFT Red Flags in the Securities Sectors”, amongst others, through the Commission’s Capital Market Institute, led by its managing director, Dr Emomotimi Agada. 

To demonstrate the premium placed on this training, the Commission’s  director general, Lamido Yuguda, all the Commission’s commissioners and the top management staff were involved. It was quite interactive and unique in content and form. Yuguda, in his opening remarks, captures the substance and essence of training the financial journalists, especially in today’s world of social media, whereby information gets to the whole world in seconds, saying: “The role of journalists in promoting market transparency, accountability, and integrity cannot be overstated. This includes your  efforts to educate investors, simplify complex financial concepts, promote good corporate governance and enhance market confidence.

“Moreover, journalists boost market efficiency by swiftly disseminating information, aiding in risk assessment, and exposing fraudulent activities. Your impact on public perception and market sentiment is significant, fostering a safer and more equitable market, benefiting investors and the wider economy.”

Financial literacy, investor education, implementation of the Capital Market Masterplan cannot succeed without a vibrant financial press. How can a journalist who does not understand the fundamentals of investment objective, risk tolerance, educate investors; or what drives share prices in the secondary market report the market accurately and professionally. The profile of investors is changing by the day. They are more interested in analysis than breaking news. 

Postscript

Other stakeholders should take a cue from the Commission. The curriculum for training the journalists should be reviewed to include new developments in the market as SEC has demonstrated and should be sustained. The new curriculum should contain case studies where fault lines can be identified in the reportage of the market activities, especially by seasoned veteran financial journalists. This does not prevent the press from exposing market infraction at any level. The bottom line is the sacred duty of investor protection. Chartered Institute of Stockbrokers (CIS) has offered scholarships to no fewer than 100 capital market correspondents to acquire the Institute’s Diploma 2, a strong foundation for a professional stockbroker. This will enhance efficient reporting of the market. Association of Securities Dealing Houses of Nigeria (ASHON), NGX, FMDQ, NASD and LCFE appreciate the essence of equipping the capital market correspondents with analytical tools for a more accurate enhanced reporting. 

As we peep into 2024, the market has become more complex with many financial instruments, including derivatives trading. Training of the financial journalists should not be left to the regulators alone. The major stockbroking firms should be involved even if at partnership level. The cost of training and retraining financial journalists  is far cheaper than the cost of managing reputational damage caused by jaundiced story due to the inadequate knowledge of a journalist about the subject. Journalists and other market stakeholders are partners in progress. Journalism is a highly demanding profession. Nigerian journalists can match their counterparts in any part of the world head and shoulder: Many Nigerian journalists who cut their teeth  in Nigeria have won international awards, including the Pulitzer Prize.  But one of their pain points is working  in an environment without adequate infrastructure but with a rather very poor reward system.

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