SEC: Why We Struck

Written by This Day Friday, 06 August 2010

Director-General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh, yesterday declared that the removal of the Director-General of the Nigerian Stock Exchange (NSE), Prof. Ndi Okereke-Onyiuke, was in the best interest of the capital market and investors.

SEC had last Wednesday ordered the removal of Okereke-Onyiuke as the DG of NSE following the face-off between her and business mogul, Alhaji Aliko Dangote.
The commission also directed that the council member elected as President of the Exchange (Dangote) in defiance of the court order should cease acting as the President pending the outcome of the ongoing litigation.

Similarly, council members elected in defiance of the court order are to cease acting as members of the council pending the outcome of the ongoing litigation.
Apart from appointing a forensic expert, Mr. Emmanuel Ikhazoboh, as Interim Administrator, the Exchange, SEC yesterday announced Mr. Ballama Manu as the Interim Head of the Council to steer the Exchange through this critical period of uncertainty on account of the pending litigation regarding some status of the individuals.

Justifying the action of the commission, Oteh said SEC had to move in to safeguard the interest of the investors as enshrined in the Investment and Securities Act (ISA) 2007.
“The commission has closely followed the developments in the NSE, particularly with respect to inadequate oversight of the exchange, ongoing litigation, allegations of financial mismanagement, governance challenges, and the inordinate delays in the implementation of the succession plan for the exchange. In following the developments, the commission has at all times carefully deliberated on the implications and ramifications of a direct intervention in the affairs of the exchange. In this deliberation, the commission weighed the consequences on the market of a direct intervention set against the broader goal of safeguarding the interest of the public and protecting the investor,” she said.

Oteh said the former NSE DG was informed of her sack yesterday morning and that the interim administrator is to manage the daily affairs and operations of the exchange until the conclusion of the recruitment and assumption of duty of the substantive DG of the NSE.
She explained that Ikhazoboh is to also oversee the transformation programme started by the NSE in 2008, key aspects of which include ensuring that a modern and world-class trading platform is developed.

Oteh said that the interim management team is expected to conclude its  assignment  “as quickly as possible”.
She reaffirmed the commitment of SEC to in ensuring that the integrity of the market is restored apart from protecting investor interest.
She said the actions taken “will lead to long term improvements in the state and the activities of the exchange, thereby safeguarding the interests of investors”.
Also speaking at the media briefing, Ikhazoboh said he was very happy with the warm reception he got from the management and staff of the NSE, saying he would accomplish the task before him as quickly as possible.

“Since my arrival, stockbrokers, top management among others have been very cooperative. All of them are very enthusiastic to make sure that market does no slide any more. My responsibility is to ensure that the market is stabilised, that integrity is brought back into the system and to ensure that the back office – administration, finance among others are put back to shape. And also to run the transformation to a point where a DG is appointed and I will need the cooperation of everybody to achieve this feat,” Ikhazaboh said.
The President of Chartered Institute of Stockbrokers (CIS), Mr. Mike Itegboje, the Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Alhaji Rasheed Yusuf, among others pledged the support for the efforts aimed at restoring investor confidence.

Meanwhile, while there were rumours of Okereke-Onyiuke going to court to challenge her removal, Dangote was said to have earlier offered to temporary step aside as the President of the Council pending the determination of the case in the court last Monday.
A statement from Dangote Group yesterday said that in a letter signed by his Counsel, Rickey Tarfa, dated Monday, August 2, 2010 and addressed to the DG of SEC,  that Dangote offered to temporarily step aside for the council to revert to the status quo which is the position of things before the August 4, 2009 when the court made an order nullifying the election.

“In order to resolve the current impasse, we suggest that the council temporarily reverts to the status quo, which is the position of things before the August 4, 2009 order, so that the Council can continue to work unchallenged through its Committees. By reverting to the status quo, Dangote will serve and function as the 1st Vice President of the Nigerian Stock Exchange, pending the outcome of the suit,” the statement said.

Reacting to the development, a stockbroker said the change was overdue but faulted the procedure used by the commission for the removal of the DG.
The General Secretary of Independent Shareholders Associations of Nigeria (ISAN), Mr. Adebayo Adeleke, said the action was “an overkill”.
“The issues involved a company that is limited by guarantee. The issues would have been referred to the council and in the absence of a council the shareholders would have been allowed to meet and decide. But this was not done. They were not given an opportunity for fair hearing. It is an overkill,” Adeleke said.

Meanwhile, the Central Bank of Nigeria (CBN) and other stakeholders in the capital market have expressed support for the intervention of the SEC on the NSE.
CBN Governor Sanusi Lamido Sanusi commended the Director General of the SEC for her action, which he said reflects her determination to clear the mess at the nation’s stock exchange.
Sanusi,  who spoke in a keynote address titled "Enhancing the Flow of Credit to the Manufacturing Sector in Nigeria Through the Ongoing Banking Sector Reform" at the Annual General Meeting of the Manufacturers Association of Nigeria (MAN) yesterday, pointed out that the actions of the SEC’s leadership underscore the need for a comprehensive reform of the financial sector.

Also, former President of the Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, who is also a market operator, said the step taken by SEC is a welcome development.
Unegbu, who is also a lawyer, former managing director of Spring Bank Plc, however, pointed out that there are errors in the procedure SEC used to intervene, which he noted need be corrected.

“I think the SEC should check the Investment and Securities Act (ISA) whether it acted rightly. What it did was to storm the Exchange with security operatives, which also does not seem right. There is no war going on at the stock exchange so why do they have to invite the security operatives,” he said.
A stock broker, Mr Idowu Ogedengbe also welcomed the development.