Will Agama’s SEC administration pass on the legacy baton?

Sola Oni

Sola Oni, an integrated communications strategist, Chartered Stockbroker and Commodities Broker and Capital market registrar, is the Chief Executive Officer, Sofunix Investment and Communications. You can reach him at onisola2000@yahoo.com

A knowledge of prophet, seer or gypsy is not required to know that the Securities and Exchange Commission (SEC) under the current administration of director general Emomotimi Agama, has intentionally embarked on total war against physical and spiritual attack on the Nigerian capital market by investment fraudsters under any guise. This is a pathway to protecting and maintaining a fair, efficient, transparent and orderly market, which are at the core of the Commission’s strategic focus.
Barely three months of assumption of the Agama administration into the office last year, the crack team, which comprises seasoned stockbrokers with intimidating credentials, implemented some reforms to scale-up the efficiency, attractiveness and competitiveness of the market. For instance, we all clapped for the Commission for further reducing bureaucratic bottlenecks in registration with enhanced electronic filing systems, while time to market has been significantly shortened to increase liquidity and boost investor confidence. Equitable environment has been provided for applicants operating in the Fintech Sector. Last year, SEC granted an ‘Approval-in-Principle’ for two digital exchanges – Busha Digital Limited and Quidax Technologies Limited as legally recognised crypto platforms in Nigeria, amongst others.
One of the apex regulator’s top priorities this year is to revamp regulations on investment fraud, known as ponzi schemes to deepen investor protection. SEC has walked its talk, by revoking the registration of Mainland Trust Limited as a capital market operator due to unresolved complaints. It has also suspended Centurion Registrars Limited, including its sponsored individuals and directors from all capital market activities due to similar reasons. The Commission has recently introduced a “name and shame” journal to publish the names of erring market operators in pursuit of its zero tolerance on market infractions.
However, beyond the iron determination to sanitize the market, there are compelling legacy issues that the new administration cannot afford to ignore. In the early 90s, I reported the story of a company called Metalloplastica Nigeria Limited for The Guardian, when the company raised funds from the primary market through Initial Public Offering (IPO). The icing on the cake was the company’s plan that its shares would be listed on The Nigerian Stock Exchange (now NGX) after the offer.
Apart from the regulatory oversight to protect investors, listing on the secondary market boosts liquidity and enables price discovery of stocks. Many investors subscribed to the offer but it turned out to be a costly gamble. Metalloplastica never applied for listing after all. The company is a metaphor for many others in which investors had lost substantial money in the primary market in Nigeria over the years. SEC’s approval of the application for capital raise is a form of guarantee. But when sleazy promoters of startups raise funds from the primary market and disappear, where is the protection for investors? In 2010, Afprint PLC was delisted from The Exchange, and in 2012, Abplast Products PLC went the same way. The Exchange has recorded many cases of delistment either voluntary or regulatory to date. It is a common occurrence in the stock market. The question is: How were the minority shareholders treated ?
In 2016, SEC issued a rule that unlisted securities of public companies can only be traded on over-the-counter (OTC) exchanges. The rule has the potential to hedge investors against risks such as illiquidity, valuation and uncertainty. But this important rule is breached with impunity daily by millions of promoters of such companies. I believe that the Commission can set up a task force to ensure compliance.
Last year, I wrote about the boardroom intrigues rocking a delisted company, IPWA PLC and also raised other concerns, including abuse of shareholding limit by institutional investors in securities exchanges. But the situation has not changed. The apex regulator should have the capacity to treat complaints from stakeholders with dispatch. These are issues that impact investor confidence. Prompt handling of complaints from market operators and investors will further justify the Commission’s efficiency and effectiveness. SEC’s operation over the years is replete with many legacy issues that are passed over like baton from one administration to another. Between 2009 and present, it is quite revealing: A stockbroker, Mallam Musa Al-faki inherited legacy issues and passed over the baton to Ms Arunma Oteh in 2010; Mounir Gwazo picked up the baton from Oteh in 2015 and passed over to Abdul Zubair in acting capacity in 2017. Mary Uduk picked it up and passed over to Lamido Yuguda in 2020 while the ebullient Agama picked up the baton of legacy issues in May 2024. Will the administration of Agama pass the baton over to the next one or reverse the trend and make history?
A new department can be set up by the Commission, or a special committee, including market operators, should be constituted to review all the IPOs that ended in the primary market in the past and what investors lost in the process. They should uncover how the shareholders were treated in the quoted companies that went bankrupt over the years without prejudice to due process in terms of settlement of tax and secured investors amongst others before the ordinary shareholders, and how minority shareholders of delisted companies were compensated.
Investors and market operators whose complaints have been pending at SEC over the years or in recent time are expressing frustration in measured tones. Much is expected from the Agama-led administration to make a difference for obvious reasons.
Although the present digital leadership of SEC is investing efforts with zest and innovation to change the narrative, legacy issues will remain the underbelly of every administration until they are addressed frontally and the time to begin is now. They all revolve around investor protection.