NSE expels 38 stockbroking firms

Regulatory documents obtained 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.”