Showing posts with label Nigerian Stock Exchange. Show all posts
Showing posts with label Nigerian Stock Exchange. Show all posts

Wednesday, April 27, 2011

Onyema calls for Market Transparency at Nigerian- South African Chamber of commerce breakfast forum


DG of NSE, Mr. Oscar Onyema


Onyema calls for Market Transparency as PanAfrican Capital Plc sponsors 2011 Nigerian- South African Chamber of commerce breakfast forum


By Ingram Osigwe


The Nigerian-South African Chamber of Commerce on Wednesday April 20 held its April 2011 Breakfast Forum. The Speaker at this edition was Mr. Oscar N. Onyema, Director General, Nigerian Stock Exchange (NSE)

Mr. Oscar Onyema, spoke on his vision for the capital market to include transparency, Innovation and liquidity. Speaking at the breakfast forum, Sponsored by PanAfrican Capital Plc, Onyema explained that his intension was to position the Nigerian capital market not only as a gateway to African frontier market but also a leading exchange for capital formation.

The NSE boss assured that his management would deploy such drivers of success at the exchange as organizational efficiency and fair level playing field for all participants in order to restore confidence in the market.


The DG of NSE with some members of staff of PAC.

He revealed that the plans of the exchange is to use better regulatory initiatives to attract more capitalization through new issues of from other sectors of the economy including the telecoms industry, adding that the market can do with significant foreign inflows but “ we are not looking for the high frequency trading”. Besides working with government to enthrone friendly policies, the new boss made it clear that new policies and procedures targeted at ensuring qualitative disclosure were best for the market at this point in time.

“Look at the market as a long term investment window instead of a speculative one,” Onyema further advised investors.



Mr Emeka Akwuaka, Company Secretary PanAfrican Capital Plc with the DG of NSE, Mr Oscar Onyema.


Mr. Eugene Ezenwa, MD CEO PAC Securities ltd and Mr Lanre Bakare, Head, Strategy and corporate Planning

He said the capital market was in need of market makers that would help to deepen it and improve liquidity.
"We will look at operational efficiency so that when you want to move a large chunk of stocks or bonds, you can do that easily without impacting on the price of the security, Said Mr. Onyema.

Mr. Onyema said the absence of market makers was affecting market liquidity.

"How do we make sure that securities have a standing bid and offer at any point in time? How do we get market makers that have the right depth and knowledge to provide liquidity in our market place? That is what we are looking at right now," he said

Managing Director/CEO of PAC Securities Limited, Chief Eugene Ezenwa, said the vision of the new CEO of NSE was going to affect the market positively, if well implemented.


Wednesday, April 1, 2009

A.G. Olisaemeka Cleared By Investments and Securities Tribunal

A.G. Olisaemeka Cleared By Investments and Securities Tribunal
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A.G. Olisaemeka Vs Securities and Exchange Commission (2007)
Nigerian Investments and Securities Law Report (2NISLR) at Page 177
Particularly at pages 196-197, paragraphs B-B

THE COMPLETE REPORT OF THE CASE OF A.G. OLISAEMEKA VERSUS THE SECURITIES AND EXCHANGE COMMISSION


A. G. OLISAEMEKA
AND
SECURITIES AND EXCHANGE COMMISSION
INVESTMENT & SECURITIES TRIBUNAL

BEFORE THE HONOURABLE CHAIRMAN AND MEMBERS
Dr. Nnenna A. Orji Hon. Chairman
Sola Ephraim-Oluwanuga, Esq. Hon. Member
Sam Chukwunyere, Esq. Hon. Member
Alhaji Aminu Dangana Hon. Member
Mr. George D. N. Feyi Hon. Member

26th day of January 2005

ADMINISTRATIVE BODY – Power of SEC to sanction erring operators
COURT – Course of justice – Duty of court to pursue
DAMAGES – Whether can be raised on appeal – How
FAIR HEARING – What amounts it entails constitutes
FAIR HEARING – Effect of violation of party’s right to
AIR HEARING – Essence of
FAIR HEARING – Natural justice – Effect of failure to comply with.

PRACTICE AND – Appeal – what is procedure of
PROCEDURE

PRACTICE AND – Parties to suit – category of
PROCEDURE

PRACTICE AND
PROCEDURE – Raising fresh issue on appeal-whether leave required.

TORT – Vicarious Liability – when applicable to a disclosed principal.

Issues:
(1) Whether the Applicant was given fair hearing, and;
(2) Whether or not the Applicant is entitled to general damages.

Facts:
The Applicant was a stock broken in the employment of Apex Securities Limited. Following investigations into a report of large scale fraud involving U.A.C. shares, the firm was invited for questioning at the Lion Building of the Nigeria Police Force, Lagos sometime in November 2002.

On July 13, 2004, the Managing Director of Apex Securities Limited informed the Appellant of a letter from the Securities and Exchange Commission (SEC) suspending him from trading on the floor of the Nigeria Stock Exchange (NSE). The Appellant claimed not to have been officially communicated of the suspension and thereafter wrote a protect letter on July 21, 2004 to the Director-General of SEC. The letter was however, not replied to. He did not get any response.

On July 26, 2004, The Appellant’s attention was drawn to a letter written to the Apex Securities Limited inviting the firm to the Administrative Proceedings Committee (APC) of Sec on August 4, 2004. He was asked by the Managing Director to represent the interest of the firm at the APC. The Appellant was not invited as a separate party to the proceedings at APC nor was he informed of the issue in dispute at the proceedings. The Appellant claimed he was only asked questions about himself and his involvement in the UAC share scam as well as the alleged falsification of the signature of the Managing Director of the firm. The Appellant was consequently found guilty of complicity of fraudulent dealing in the capital market. He was banned from business in the capital market by the SEC and handed over to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution on the UAC share scam.

The Appellant, aggrieved with the decision of APC appealed to the Investments and Securities Tribunal (IST) for a review of the decisions.

HELD (allowing the appeal in part)

(1) On power of SEC to sanction erring operators –
SEC as the apex regulator in the capital market is vested with statutory authority to conduct investigation to ascertain whether there has been a violation of the Investments and Securities Act. APC of SEC derived its powers from Section 259 of the Investments and Securities Act, 1999 and the Rules and Regulation made thereunder. The Commission has power to regulate the capital market against abuse. It acted appropriately when it invited the parties involved in the share scam to APC in order to uncover the causes and perpetrators of the fraud. The ISA 1999 enumerated sanctions that the Commission is empowered to apply against offenders, which include reprimand, suspension, bar or imposition of fines or penalties on the erring broker, dealer or stock exchange. (PP. 197-98, paras D-A)

(2) On what constitute proper procedure for filing appeal at the Tribunal-
The proper procedure for the Appellant’s claim in this regard was to file Notice of Appeal instead of an Originating Application as he has done. Section 236(1) of the Investment and Securities Act 1999 provides as follows:
“A person aggrieved by any action or decision of the commission under this Decree, may institute an action in the Tribunal or appeal against such decision within the period stipulated under this Decree” (P. 191, para C)

(3) On whether an irregularity may affect a suit before the Tribunal –
Rule 85(1) of the Investments and Securities Tribunal Procedure Rule 2003 states that: “Any irregularity resulting from failure to comply with any provision of these Rules or of any direction of the Tribunal before the Tribunal has reached its decision shall not of itself render the proceedings void” And Rules 85 (2) sates that “where any such irregularity comes to the attention of the Tribunal, the Tribunal may give any directions it thinks just before reaching its decision to cure or waive the irregularities”

This irregularity in this suit has not in any way affected the materiality or merit of the case. There is no likelihood that any of the parties is likely to suffer any defect or that there will be miscarriage of justice by curing the irregularity. [NALSA & TEAM ASSOCIATES V. NNPC (1996) 3 NWLR pt 49 pg 621, Maja Vs Samouris (2002) NWLR pt 765, 78] (PP. 191-192, paras D-A)

(4) On duty of court to pursue the courser of justice –
The Tribunal pursues the course of substantial justice between parties rather than hiding under the cloak of technicalities. The Tribunal in the interest of justice and in view of its overriding objective to deal with cases fairly and justly, which includes using its special expertise effectively to deal with cases in proportion to the complexity of the issues and the resources of the party deems this case an APPEAL and it shall be so treated. (P. 192, para B)

(5) On the need for a court, tribunal or administrative body to comply with the rules of natural justice –
Rule 4(1) of the APC Rules of Procedure provides: “All actions brought before the committee shall be brought in the true names of the real parties who have interest in the matter”.
These Rules are in consonance with the Rules of natural justice. It is so vital that any rule of court, tribunal or administrative body that does not comply with the provision of antural justice is a nullity. [Internationally Polymera System Limited Vs Glover & 1 Or (2002)7 NWLR pt 765 pg 124 at 129, ratio 4] (P. 193, para B-C)

(6) On what amounts to denial of fair hearing –
The right to fair hearing is constitutional. Two rules inherent in the principle are audi alteram partem, that is, the parties must be heard and Nemo judex in causa sua, that is, one should not be a judge in ones own cause, these principles if not adhered to at any given time in any administrative inquiry, judicial or quasi-judicial process, would amount to denial of fair hearing (P. 193, para E)

(7) On the essence of fair hearing –
At the two previous sittings of APC there was no evidence that the Appellant was invited to defend himself. The overwhelming evidence is that the Appellant was not invited to the APC proceedings. It is deductive that it was at these previous proceedings which the Appellant was not invited to or heard that the Respondent imposed suspension order on the Appellant. The resort to fair hearing is to avail a party to the dispute of the opportunity to present his case without intimidation, equal access to facilities to conduct his case, the right to call evidence, to examine or cross-examine witnesses called and the opportunity to conduct his own case as his abilities permit. The party would also be in position to hear and know all the evidence against him. [Agbahomovo Vs Eduyegbe (1999) 3 NWLR pt 594, 170] (PP. 193-194, paras F-A)

(8) What fair hearing entails –
The Rules of natural justice envisages that the applicant should be informed of the charges made against him as well as be given adequate time to prepare his defence. The Rule further envisages that the party must be informed promptly of the nature of the violation/offence in the language that he understands. (P. 195, para A)

(9) On who is a party to a suit –
Party to a proceeding transcends those present in the proceeding and includes those who have direct interest in the subject matter and had opportunity to make representations at the proceedings and to be joined as a party to the suit. Parties to a suit are further categorized as proper parties, desirable parties and necessary parties. Proper parties are those who for some good reasons are necessary for the determination for the suit. Desirable parties are those who have direct interest or maybe affected by the result. Necessary parties are those whoa re not only interested in the subject matter but also in whose absence the proceeding could not be fairly dealt with. [Inyang Vs Ebong (2002) 4NWLR pt751, 284] (PP. 195-196, paras C-A)

(10) On the effect of an order made against a non-party to a suit—
“…The Appellant in all material respect was not a party to the suit. The effect of the order made against a party who has not been heard in our legal jurisprudence is very clear. An order made against a party who was not informed or given any opportunity to defend himself or to be represented at the hearing of the suit, this amounts to denial of fair hearing. See Ndulue V. Ibezim [2002] 12 NWLR [Pt 780] 139 at 151, ratio 12 (P. 196, para A)

(11) On the effect of the violation of a party’s right to fair hearing –
The effect of the violation of the right of the Appellant to fair hearing is that such decision is rendered null and void. The outcome of the APC proceedings in question and its decision therefore cannot stand. (P. 197, para A)

(12) On the need to seek leave before raising a fresh issue on appeal—
The procedure for raising fresh issues on appeal is very clear. The Appellant needs to seek the leave of the Tribunal to raise fresh issues on appeal. It is trite that an issue not raised at trial cannot except with the leave of the court be raised on appeal. In the instant case the Appellant failed to raise the issue of damages at the APC. In NEPA V. Adesoji, (2002), 17 NWLR, (Pt 797), 578 at 589 ratio 16 where the Court of Appeal held inter alia that a point not at the trial court could with the leave of the court be raised at the Court of Appeal if the point is of fundamental importance which could have been taken on the face of the record without further evidence. (PP. 198-199, paras C—A).

(13) On when vicarious liability applies to a principal –
On the liability of the Appellant, in FIS Securities Limited Vs. SEC (supra), the Tribunal enumerated circumstances in which a master is responsible for the act of the servant to include:

i. if the action is incidental to the employment of the servant
ii. if the employee at the time of committing the tort was engaged in his employer’s business
iii. if employee acted on his own initiatives
iv. employee’s theft
v. fraud of the employees, and;
vi. the surrounding circumstances. (P. 198, para B)

Cases considered:
Agbahomovo V. Eduyegbe (1999) 3 NWLR (Pt 594) 170.
Asafa Foods Factory Limited V. Alraine Nig. Ltd. (2002) FWLR (Pt 125).

Barmo V. State (2000) 1 NWLR (Pt 641) pg 2420000

FIS Securities Limited V.SEC (2004) ISTJR 145.

Idakwo V. Ejiga (2002) 13 NWLR (pt 783) pg 156

International Polymera System Ltd V Glover & 1Or (2002) 7 NWLR (pt 765) pg 124

Inyang V Ebong (2002) 4 NWLR (pt 751) pg 284

Maja V Samouris (2002) 7 NWLR (pt 765) pg 78

Murphy Shipping Line (Nig.) Ltd V National Maritime Authority (2000) 9 NWLR (pt 672) pg 391

NEPA V Adesaaji (2002) 17 NWLR (pt 797) pg 578

NALSA & Team Associates V NNPC (1996) 3 NWLR (pt 439) pg 621

Ndulue V. Ibezim (2002) 12 NWLR (pt 780) pg 139

Statutes considered:
APC Rules of Procedure

Admiralty Jurisdiction Decree No. 59 of 1991

Constitution of the Federal Republic of Nigeria 1999

Investments and Securities Act 1999

Rules of Court Considered:

Investments and Securities Tribunal (Procedure) Rules 2003

Abbreviation:

APC - Administrative Proceedings Committee
FWLR - Federation Weekly Law Report
ISA - Investments and Securities Act
ISTJR - Investments and Securities Tribunal Judgments and Rulings
NWLR - Nigerian Weekly Law Report
SEC - Securities and Exchange Commission

COUNSEL

U. M. Yamah, esq. for the Appellant
J. G. Taidi, esq. for the Respondent.

DR. (MRS.) NNENNA A. ORJI, Honourable Chairman, (delivering the judgment): The Appellant was a staff of Apex Securities Limited where he worked as a stockbroker for 11 years. Sometime in November 2002, the firm was invited for questioning at the Lion Building of Nigerian Police Force, Lagos in respect of the investigation of large-scale fraud involving U.A.C. Plc shares. On July 13, 2004, the Managing Director of Apex Securities Limited, informed the Appellant that there was letter from SEC suspending him from the trading floor of the NSE, of which the Appellant claimed he has not been officially communicated. The Appellant promptly protested the suspension through a letter dated July 21, 2004 addressed to the Director General of Securities and Exchange Commission (SEC). The aforestated letter was not replied.

On 26th July 2004, his attention was drawn to another letter from SEC to the firm inviting the firm to the Administrative Proceedings Committee (APC) of SEC on August 4th, 2004. The Appellant was informed by the Managing Director of Apex Securities Limited that he was invited to represent the interest of the company. The Appellant was not invited as a party to the proceedings and was not informed of the subject matter of the proceedings. At the APC the Appellant alleged that he was queried about both personal matters and his involvement in the U.A.C. share scam, as well as the alleged falsification of the signature of the Managing Director of his firm. The Appellant was found guilty of complicity to perpetrate fraud in the capital market. Her was banned from the capital market by Securities and Exchange Commission. The Appellant was handed over to EFCC for investigation and prosecution on the said share scam.

The Appellant claimed as follows:

1. An order setting aside the decision of the APC in case No. APC/5/2003 as same was reached in contravention of the rights of the Appellant as guaranteed in the 1999 Constitution of the Federal Republic of Nigeria.

2. An order of the Tribunal restoring all the rights and privileges of the Appellant in the capital market.

3. General damages of N95,000.00 against the Respondent for unduly subjecting the Appellant to emotional, psychological and mental trauma, loss of goodwill and business reputation.

The Appellant formulated five issues for determination by the Tribunal.
These are:

1) Whether the Appellant not being a party to the proceedings in case No APC/5/2003 could have been indicted and punished in the same proceedings.

2) Whether taking cognizance of the entire circumstances surrounding the proceedings leading to the indictment of the Appellant, it can be said that the Appellant was given a fair hearing. If the above is answered in the negative whether APC proceeding is not liable to be set aside.

3) Whether Appellant is personally liable for the Acts of his employer.

4) Whether the onus of proof in a civil case where crime is imputed was discharged by the Respondent in Case No. APC/5/2003 considering the evidence adduced at the APC. Further, whether the Respondent has the competence to adjudicate and punish for a crime.

5) Whether the Appellant is not entitled to damages.

The Respondent formulated three (3) issues to be determined by the Tribunal. The issues were;

1) Whether the Rules of fair hearing were observed by the APC of SEC in case of No APC/5/2003

2) Whether the acrimony between the Appellant and the Managing Director of Apex Securities denied the Appellant fair hearing.

3) Whether the Appellant is entitled to any damages.

We shall take the arguments of the counsel on the above issues for determination.

On issue no. 1, the Appellant argued that the charge sheet and the record of proceedings admitted as Exhibit E and Exhibit 1 respectively did not mention the Appellant’s name as a party to the proceedings. He submitted that even the Respondent’s witness under cross-examination admitted throughout the proceedings that only Apex Securities Limited was invited and it was represented by the Managing Director. He noted that the letter dated July 26th, 2004 admitted as Exhibit D was addressed with particular reference to the Appellant.

He submitted that since the Appellant was not a party to the proceedings before APC in case No./APC/5/2003, he could not have been properly indicted and punished in the said proceedings. He relied on the case of Kokoro-Owo Vs. Lagos State Government, (2001), 5 MJSC, page 166 (1) 169 ratio 2.

On issue no. 2, counsel submitted that Exhibit A, Exhibit B and Exhibit C especially Exhibit A show that on 13th July 2004, the Appellant had already been suspended before his invitation to APC of SEC. He argued further that after due investigation, it was discovered that the fraud was committed by Mr. Adegbusi with the connivance of (1) Apex Securities Limited (2) Molten Trust Limited (3) Newdevco Finance Service Co. Limited. The Appellant’s name was not mentioned or included in the list of those who connived to commit the alleged offence. He argued that there were two previous sittings of APC of SEC in which Apex Securities Limited was represented by The Managing Director and the Appellant was not invited. In view of the aforesaid, he submitted that the Appellant had no knowledge of the nature of the evidence adduced against him nor had the opportunity to cross-examine those who testified against him. He relief on the decision of the Supreme Court in Denloye Vs Medical & Dental Practitioners Disciplinary Committee, (2003), 44 WRN, 115 @ 117, ratio 2.

The Appellant also deposed to the fact that he never saw nor was confronted with Exhibit Apex A1-A20 at the APC’s proceedings which is reflected in the record of proceedings of APC as documents forged by Appellant. The Appellant was not afforded the opportunity to contradict or challenge the evidence raised at the APC proceedings. He submitted that the proceedings wherein the APC relied on documents that were brought to its knowledge without equal and fair opportunity to challenge its propriety amounts to denial of fair hearing. He relied on the case of Adepoju Vs. Hon. JUSTICE Ige & Others, (2003), FWLR, page 69 at 89 on the propriety of being invited as a party. He cited the case of Garba Vs University of MAIDUGURI< (1988) 1 NWLR (Pt 18) 550 (1) 578; Adeniyi Vs Governing Council of Yaba College of Technology, (1993) 6 NWLR (Pt 300) 426 @ 467 per Olatawura JSC; Nigeria Teaching Hospital Management Board V Nnoli, (1994) 8 NWLR (Pt 363) 376 @ 407-408; Adedeji v Police Service Commission, (1968) NMLR 102; Section 26 (1) constitution of the Federal Republic of Nigeria 1999, Iroko v Uka, (2002), 14 NWLR, (Pt 786), 195 @ 206, ratio 9; and Ogboh V. F.R.N., (2002), 10 NWLR (Pt. 774), 21 at 26, ratio 4. Arguing he stated that assuming but not conceding that the Appellant was invited to the proceedings of the Respondent via Exhibit D, the notice was inadequate to give the Appellant notice to defend himself of any wrongdoing. He relied in Adepoju v Justice Ige & Others (supra). Furthermore, the Appellant argued that he had no time at all to prepare for his defence in person or through his counsel as the entire proceedings were conducted with the speed of light. He relied on Ogboh v FRN, supra. He urged the Tribunal to hold that the proceedings at SEC contravenes the rule of natural justice. For this position, he relied on Adeniyi v Yaba College of Technology, supra. On issue No. 3, he submitted that liability in this respect is vicarious where it is established. He relied on FIS Securities V Securities and Exchange Commission, 2004, ISTJR, of page 145 at 149, ratio 3-4 On issue No. 4 He contended that it is trite that where a crime is imputed in a civil proceeding the standard of proof required is proof beyond reasonable doubt. He referred to section 138 (1) Evidence Act Laws of the Federation of Nigeria 2004 and the Court of Appeal decision in Maure v Abdul, (2001), 4 NWLR. (Pt 702), 92 @ 99, ratio 2-3. He submitted that the Respondent did not discharge the onus. In addition, relying on he cases of Garba Vs University of Maiduguri (supra), Adeniyi Vs Governing Council of Yaba College of Technology (supra), Denloye Vs Medical & Dental Practitioners Disciplinary Committee (supra), he submitted that an administrative body did not have power to punish for an alleged criminal offence where such an offence has not been established by a competent court of law. On issue no. 5. The counsel premised his argument on the fact that award of cost follows events. The events, he enumerated include incarceration at EFCC cell and denial of access to the capital market since July 13, 2004 translated into a huge loss for the Appellant. He claimed for the cost of prosecuting the appeal. He urged the court to award the sum of N95,000.00 which he submitted is conservative. He prayed the Tribunal to restore all the rights and privileges of the Appellant in the capital market. We shall now take the argument of the Respondent. On issue no. 1, he submitted that the Appellant had reasonable opportunity to defend himself of the allegation brought against him. He relied on Exhibit D, the hearing notice, and the witness statement Exhibit K and argued, that the hearing notice was marked “Attention Mr. Olisaemeka”. He cited Dantata & Sawoe Construction Co. Limited Vs Angulu Ibrahim, 2003, 31 WRN, 80 @ 88. He contended that the Appellant who attended the APC proceedings could not deny that he was given fair hearing. He submitted that the proceedings were fair and transparent. He relied on Rule 9 (11) of the APC Rules of procedure. He submitted that the Appellant had notice of the proceedings and took a further step by appearing at the proceedings. He cited African Continental Bank Plc and Another Vs Emostrade Limited, (2002) 2 SCNJ 299 at 306 and submitted that the Appellant had failed to adduce evidence to show that he was denied fair hearing. On issue no. 2 He submitted that the APC proceedings were conducted in a transparent manner. He referred to the Appellant’s testimony as contained in Exhibit 1. He submitted that the Appellant was not intimidated but given fair opportunity to present his case. Issue No. 3 He argued that the Appellant is not entitled to special damages because the particulars of the damages were not stated by the Appellant. In addition, he argued that since the issue involved is the suspension of the Appellant because of fraudulent dealing in the market, he was not entitled to any relief of damages. The Respondent therefore urged the Tribunal to refuse the Appellant’s prayers. In its reply brief, the Respondent in reply to whether the Appellant was a party to the proceedings, relied on the case of John Akinwoye Bamigboye and 3 others Vs Chief James Awoyinka and Another, 2000, FWLR, (Pt 113), 396 at 406 in which the Court held that a person who takes part in a legal transaction or proceedings is said to be a party to it. He submitted that since the Appellant took part in the proceedings, he was a party to the suit. He also submitted that the Appellant’s evidence was inconsistent with his pleading, he relied on Okhuaroba and 20 Others Vs Chief Aigbe, (2002), FWLR, (Pt 116), 885, paras E-F and Egbesimbea Vs Onusuruike, (2002) FWLR pt 128 at 1386 at 1432 paras D-F. On the issue of the vicarious liability raised by the Appellant, he referred to Rule 110(1) (d) of the SEC Rule and section 86 (c) ISA. He submitted that the law envisaged individual responsibility regardless of agency status. He referred to Murphy Shipping Line Nigeria Limited Vs National Maritime Authority, (2002), 9 NWLR, (Pt. 672), 391; Ashaffa Goods Factory Limited Vs Alraine Nigeria Limited, 2002, FWLR, (Pt 125). He submitted that the liability for the violation which the Appellant is alleged to have committed is personal. In reply to issue no. 4 raised by the Appellant, the Respondent relied on the case of University of Ilorin Vs Tosin Akinrogunde, (2002), FWLR (Pt 98), 1006 @ 1016, paragraph E-F that due to the nature of securities transactions, the Respondent has power to suspend or even ban a broker from the capital market even where crime is imputed. The imperative of this action was to protect the investing public and integrity of the capital market. JUDGMENT

A. Having considered the submission of the counsel, the Tribunal hereby formulates 2 issues to guide the Members in the determination of the suit.
1) Whether the Appellant was given fair hearing.
2) Whether or not the Appellant is entitled to general damages.

B. Irregularity
It is apt to first comment on the procedure adopted by the Appellant in prosecuting the case. The APC of SEC found inter alia that the Apex Securities Ltd failed to exercise proper supervision over the activities of its staff, Mr. A. G. Olisaemeka, the Lagos Branch Manager of the company (the Appellant herein) who acted in connivance with one Michael Adegbusi (the 1st Respondent in the case before APC) to perpetrate the alleged fraud. Based on the above findings, the Appellant was banned from all capital market activities by the SEC.

C. Essentially, a decision was reached at APC of SEC concerning further participation of the Appellant in capital market activities. The Appellant was aggrieved by this decision hence the filing of this action at the Tribunal. In other words, this case strictly sensu is an appeal against the decision of APC. The proper procedure for the Appellant’s claim in this regard was to file Notice of Appeal instead of an Originating Application as he has done. Section 236 (1) of the Investments And Securities Act 1999 provides as follows:
“A person aggrieved by any action or decision of the commission under this Decree, may institute an action in the Tribunal or appeal against such decision within the period stipulated under this Decree”
The Tribunal, however, views this as an irregularity and Rule 85 (1) of the Investments and Securities Tribunal Procedure Rule 2003 states that: “Any irregularity resulting from failure to comply with any provision of these Rules or of any direction of the Tribunal before the Tribunal has reached its decision shall not itself render the proceeding void.”

D. And Rule 85 (2) states that “where any such irregularity comes to the attention of the Tribunal, the Tribunal may give any directions it thinks just before reaching its decision to cure or waive the irregularities”

E. The irregularity in this suit has not in any way affected the materiality or merit of this case. There is no likelihood any of the parties is likely to suffer any defect or that there will be miscarriage of justice by curing the irregularity. NALSA & Team Associates Vs NNPC, (1996), 3 NWLR, (Pt 439) 621 and Maja V. Samouris, (2002), 7 NWLR, (Pt 765), 78 at 88. The Supreme Court in Maja’s case held that the courts now pursue the course of substantial justice between parties instead of taking refuge in unnecessary legal technicalities.

F. The Tribunal pursue the course of substantial justice between parties rather than hide under the cloak of technicalities. The Tribunal in the interest of justice and in view of its overriding objective to deal with cases fairly and justly, which includes using its special expertise effectively to deal with cases in proportion to the complexity of the issues and the resources of the party deems this case an APPEAL and it shall be so treated.

G. Denial of Fair Hearing
The Appellant and the Respondent agree that the issue of fair hearing is very crucial and the touchstone of this appeal. SEC carried out targeted inspection of UAC registrars department wherein it discovered that there was a fraud in the transaction of UAC shares. The alleged fraud was perpetrated by Assistant Registrar, Mr. Michael Adegbusi in connivance with other stock broking firms such as Apex Securities Limited. The matter was referred to APC of SEC for determination. The Committee issued its hearing notices dated March 16, 2004 and July 12, 2004 inviting Apex Securities Limited to explain its roles in the transaction. It was established that in the two previous meetings, the Appellant was not invited to defend his alleged complicity in the share scam. The Appellant was seriously aggrieved that he was not invited to defend himself and that a verdict of suspension was handed to him. It is pertinent at this juncture to examine whether the principle of fair hearing was adhered to in this respect.

H. The rights to fair hearing in consonance with the Constitution was clearly stated in section 29(7) of the Investments and Securities Act 1999 which provides that “The Commission, by order, suspend or cancel a certificate of registration in such manner as may be prescribed but no order under this subsection shall be made unless the person concerned has been given a reasonable opportunity of being heard”. The APC which is a fact finding body functioning in the capital market derived its powers from section 259 of the Investments and Securities Act, 1999 and the Rules and Regulation made thereunder. The Committee is governed by the provisions of the Investments and Securities Act and the rules and regulations which enshrine fair hearing in the dispensation of justice. Rule 9(11) of the APC Rules of Procedure provides that:
“A party to the proceedings before the committee may appear in person or be represented by a legal practitioner acting as a counsel provided that the committee may order the person to appear in person if it is of the opinion that in the interest of justice and the protection of investors it is necessary to do so.”

I. Rule 4 (1) of the APC Rules of Procedure also provides:

“All actions brought before the Committee shall be brought in the true names of the real parties who have interest in the matter”

J. These rules are in consonance with the rules of natural justice. It is so vital that any rule of court, tribunal or administrative body that does not comply with the provision of natural justice is a nullity. In International Polymera System Limited Vs Glover and I Other, (2002), 7 NWLR, (Pt 765), 124 @ 129, ratio 4, the Court of Appeal held inter alia that any non-compliance with rules of court is prima facie an irregularity and not a ground for nullity. But a non-compliance which amounts to a denial of fair hearing may amount to a nullity.

K. Section 36(1) of the 1999 Constitution states that “in the determination of his civil right and obligations, including any question or determination by or against any government or authority, a person shall be entitled to a fair hearing within a reasonable time by a court or other Tribunal established by law and constituted in such manner as to secure independence and impartiality”.

L. The right to fair hearing is constitutional. Two rules inherent in the principle are audi alteram partern, that is, the parties must be heard and Nemo Judex in causa sua, that is, one should not be a judge in ones cause, these principles if not adhered to at any given time in any administrative inquiry, judicial or quasi judicial process, it would amount to denial of fair hearing.

M. At the two previous sittings of APC there was no evidence that the Appellant was invited to defend himself. The overwhelming evidence is that the Appellant was not invited to the APC proceeding. It is deductive that it was at these previous proceedings which the Appellant was not invited to or heard that the Respondent imposed suspension order on the Appellant. The resort to fair hearing is to avail a party to the dispute opportunity to present his case without intimidation, equal access to facilities to conduct his case, the right to call evidence, to examine or cross-examine witnesses called and the opportunity to conduct his own case as his abilities permit. The party would also be a in position to hear and know all the evidences against him. In Agbahomovo V. Eduyegbe, (1999), 3 NWLR, (Pt 594), Page 170 at 184, ratios 7-8 the Supreme Court held inter alia that:

7. A hearing can only be fair when all the parties to the dispute are given a hearing or an opportunity of a hearing. If one of the parties is refused a hearing or not given opportunity to be heard, the hearing cannot qualify as a fair hearing.

8. The right to a fair hearing does not stop with the parties being present in court. It is a right to be heard at any material stage of the proceedings.

N. Onu JSC at page 184 stated that:
“it is conceded that it is a fundamental principle and requirement of law that parties are entitled to be heard on the cases put forward by them before the court”

O. We find that the previous two sittings of the APC in march and July 2004 in which evidence was taken against the Appellant failed to adhere to the principles of fair hearing.

P. In addition to the foregoing, the Appellant though invited by letter dated July 26th 2004 to the APC proceedings was not charged for the violation of any law or rules made pursuant to a law. Section 36(2) (a) of the 1999 Constitution “provides for an opportunity for the person whose rights and obligation may be affected to make representations to the administering authority before the authority makes decision affecting that person.”

Q. Furthermore, Exhibit G indicates the parties to the proceedings which does not include Appellant. The APC violated section 36(2) of the Constitution when it failed to give opportunity to the Appellant to make representations before making its decision that affected him.

R. The rule of natural justice envisages that the applicant should be informed of the charges made against him as well as be given adequate time to prepare his defence. The rule further envisages that the party must be informed promptly of the nature of the violation/offence in the language that he understands. The Appellant evidence that he was directed by the Managing Director of the Apex Securities Ltd to represent the company at the APC of SEC has not been denied or refused by the Respondent. In Barmo V. State (2000), 1 NWLR, Page 424 at 426, the court held that the constitutional right of a citizen of Nigeria to fair hearing includes the right to know and hear what charges are being preferred against a citizen who otherwise is deemed innocent. When the accused person has been told by the court the charges proffered against him, he will be able to prepare whatever defence he has to the charge which defence includes the decision to take a counsel and the instruction to be given to a counsel for defence. A close examination of Exhibit D relied upon by the Respondent does not indicate charges against the Appellant and as at that time the APC had commenced proceeding in Case No. APC/5/2003.

S. The issue of the Appellant not being a party was strongly canvassed by the Appellant in his brief which the Respondent failed to rebut it in its reply. We will reproduce the response of the Respondent in paragraphs 6 – 7 of its statement of evidence:

6. The APC issued hearing notices dated March 16th 2004 and July 12th 2004 inviting respondents including Apex Securities Limited to explain their rules in the transaction.

7. The Applicant, Mr. A. G. Olisaemeka appeared before the APC on behalf of Apex Securities Limited in addition to the Managing Director of Apex Securities Limited.

T. The Respondent argued vehemently that the appellant having participated in the proceedings that qualified him to be a party. Party to a proceedings and includes those who have direct interest in the subject matter and had opportunity to make representations at the proceedings and to be joined as a party to the suit. Parties to a suit are further categorized as proper parties. Proper parties are those who for some good reasons are necessary for the determination of the suit. Desirable parties are those who have direct interest or may be affected by the result.

U. Necessary parties are those who are not only interested in the subject matter but also in whose absence the proceedings could not be fairly dealt with. The Court of Appeal in Inyang V. Ebong, (2002), 4 NWLR, (Pt. 751), Page 284 at 340 per Edozie JCA that “in legal proceeding generally speaking parties are persons whose names appear on the records as plaintiff or defendant. A plaintiff who conceives that he has a cause of action against a particular defendant is entitled to pursue his remedy against that defendant only and should not be compelled to proceed against other person whom he has no desire and no intention to sue.” The relevant consideration in determining a party had been whether the entry of a particular person will help the court to unravel the truth. The Appellant was not in contemplation when the Respondent concluded its charges and commenced trial at APC. From the charges and trial, the Respondent intended to proceed against Apex Securities Limited. It is proper and legitimate that in corporate practice, the Appellant be beckoned to appear or represent the firm. If the Respondent desired to proceed against the Appellant it would have been evidenced on Exhibit D. If the Respondent was desirous of joining the Appellant as a party, it would have been most proper to follow Rule 4 (1) of the APC Rules of Procedure. The Appellant in all material respects was not a party to the suit. The effect of the order made against a party who has not been heard in our legal jurisprudence is very clear. Where a party was not informed or given notice of the suit and thus was not heard or accorded any opportunity to defend himself or to be represented at the hearing of the suit, this amount to denial of fair hearing. See Ndulue V Ibezim, (2002), 12 NWLR, (Pt. 780), page 139 at 151, ratio 12.

V. The law is clear on the procedure for third parties in any proceedings. Exhibit D relied upon by the Respondent to prove that the Appellant was fully involved in the APC proceeding is an after thought. The said exhibit placed side by side with Exhibit A, letter suspending the Appellant from the capital market indicated that the APC was already prejudiced against the Appellant. The APC meeting scheduled to hold on August 4 2004 was a mere window dressing as the rights and obligations of the Appellant had already been decided without an opportunity to make representations. In Agbahomovo V Eduyegbe supra, the Supreme Court stated that the right to a fair hearing does not stop with the parties being present in court. It is a right o be heard at any material stage of the proceedings. The subsequent invitation of the Appellant to the APC cannot in any way undo the wrong and injustice already meted out of the Appellant.

W. The effect of the violation of the right of the Appellant to fair hearing is that such decision is rendered null and void. The outcome of the APC proceedings in question and its decision therefore cannot stand. In Idakwo V. Ejiga, (2002), 13 NWLR, Pt. 783, 156 the Supreme Court held that a finding that there is no fair hearing implies in itself a prejudice to the party who lost and is tantamount o a finding of a contravention of his right to fair hearing guaranteed by the Constitution. He does not need to have suffered any particular injury for him to be entitled to have a decision against him, obtained unfairly, set aside. In line with the foregoing, the consequence of the breach of the rule of fair hearing is that the entire proceeding is null and void.

X. The Tribunal therefore holds that the SEC letter suspending the Appellant from the capital market was not issued in accordance with section 29(7) of the Investments and Securities Act and was contrary to the rule of law. Accordingly, the letter of suspension and the subsequent ban of the Appellant from the capital market are hereby set aside. Consequently, the rights and privileges of the Appellant in the capital market are hereby restored provided that he is in compliance with all necessary requirements for operation in the capital market.

Y. It is imperative to briefly comment on a few worrisome issues raised by the Appellant based on the statutory responsibilities of the Respondent Section 8 of the Investment and Securities Act spelt out the functions of SEC.

8(m) protect the integrity of the securities market against the abuse arising from the practice of insider trading.

8(u) prevents fraudulent and unfair trade practices relating to the securities market.

Z. SEC as the apex regulator in the capital market is vested with statutory authority to conduct investigation to ascertain whether there has been a violation of the Investments and Securities Act. APC derived its powers from section 259 of the Investments and Securities Act, 1999 and the Rules and Regulations made there under. The Commission has power to regulate the capital market against abuses. It acted appropriately when it invited the parties involved in the share scam to APC in order to uncover the causes and perpetrators of the fraud. The ISA 1999 enumerated sanctions that the Commission is empowered to apply against offenders which include reprimand, suspension, ban or imposition of fines or penalties on the erring broker, dealer or stock exchange.
AA. On the liability of the Appellant, in FIS Securities Limited V. SEC, supra, the Tribunal enumerated circumstances in which a master is responsible for the act of the servant o include: if the action is incidental to the employment of the servant (ii) if the employee at the time of committing the tort was engaged in his employer’s business (iii) if employees acted on his own initiatives (iv) employee theft (v) fraud of the employees and (vi) the surrounding circumstances. The cases cited by Respondent on the liability of the Appellant to wit: Murphy Shipping Line (Nig.) Ltd. V National Maritime Authority (supra) and Asafa Foods Factory Limited V. Alraine Nig. Ltd. (supra) dealt with the Admiralty Jurisdiction Decree No. 59 of 1991. Section 16(3) of the Admiralty Jurisdiction Decree imposed personal liability on an agent for the acts or omission of his disclosed principal. This principle of law which recognizes the liability of an agent to a disclosed principal is only applicable in Admiralty matters. Nonetheless, in ordinary contract relationship or tort, the general principle is that the act of an agent or servant of a company is the act of the company. Once the servant is acting in the course of his employment in respect of the master’s business the master is held liable notwithstanding that the act was expressly forbidden by the master’s corporation constitution. The issue of vicarious liability of the Appellant is not germane to the determination of this suit due to the breach of his constitutional right to fair hearing which is the crux of the appeal.

BB. Damages
On the issue of damages, that the Appellant claimed general damages in the sum of N95,000.00 against the Respondent for unduly subjecting the Appellant to emotional, psychological and mental trauma, loss of goodwill and business reputation. We note that the issue of damages was not canvassed at the APC of SEC and therefore is a fresh issue. The procedure for raising fresh issues on appeal is very clear. The Appellant needs to seek the leave of the Tribunal to raise fresh issues on appeal. It is trite that an issue not raised at trial cannot except with the leave of the court be raised on appeal. In the instant case the Appellant failed to raise the issue of damages at the APC. In NEPA V. Adesoji, (2002), 17 NWLR, (Pt 797), 578 at 589 ratio 16 where the Court of Appeal held inter alia that a point not raised at the trial court could with the leave of the court with the leave of the court be raised at the Court of Appeal if the point is of fundamental importance which could have been taken on the face of the record without further evidence.

CC. This claim ought properly to have been brought under the headings of general and special damages respectively. It is trite that special damages must be pleaded and proved. Apart from the foregoing, the Appellant cannot claim damages on appeal as an appellant court can only review damages; and as earlier noted if the Appellant desired to raise the issue of damages as a fresh point, he ought to have sought and obtained the leave of the Tribunal to do so.

DD. The Appellant’s prayer for damages is hereby struck out.

EE. In conclusion, we are mindful to add that the Tribunal is a new judicial institution whose rules of procedure need to be carefully studied. In this vein, counsel are kindly advised to ensure that their processes comply with the rules and procedure of the Tribunal. The caution is necessary to avoid the procedural problem posed by this case. The Tribunal’s Registry is ever prepared to render assistance to counsel and litigants.

We make no order as to costs.



N.B:
Nigerians Report has posted this report to correct the misleading information on this case as posted on the website of SEC since 2007 to date. It is wrong and illegal for the Securities and Exchange Commission (SEC) to publish an erroneous report to malign Mr. A.G. Olisaemeka without publishing the verdict of the Investments and Securities Tribunal (IST), thereby misinforming and misleading the general public on the character of Mr. Olisaemeka who has since been cleared of any wrongdoing or fraudulent practice and his suspension lifted since 10th of May 2005.

In a letter dated 10th May 2005, the Securities & Exchange Commission (SEC) addressed the CASE NO. IST/OA/02/04 OLISAEMEKA VS SECURITIES AND EXCHANGE COMMISSION, and stated that:

The above subject matter refers.

In view of the order of the IST in the above mentioned case, we write to inform you that your suspension from operating in all activities of the capital market in Nigeria is hereby lifted.

Yours faithfully,
K.L. Adejekughele
for: Director-General



Friday, March 27, 2009

Let Us Stop the Aliko Dangote Mafia Gang-Up against African Petroleum Plc

Let Us Stop the Aliko Dangote Mafia Gang-Up against African Petroleum Plc

Nigerians Report has decided to address the case of The Unethical Manipulation of AP Shares Leading To a Decline in Value by Nova Finance & Securities Limited and Alhaji Aliko Dangote published on pages 94-95 of The Guardian on Tuesday, March 24, 2009.

It is important that this grievous allegation by the management of African Petroleum Plc against the Nova Finance & Securities Limited and Alhaji Aiko Dangote should be well investigated and the findings should be well circulated for the public knowledge of Nigerians and citizens of other nations, because hundreds of thousands of them are shareholders of these public quoted companies in Nigeria. Any act of economic misconduct or sabotage in Nigeria should be dealt with by the Nigerian Stock Exchange (NSE), Securities and Exchange Commission (SEC) and the Economic and Financial Crimes Commission (EFFC). The alarm raised by the management of African Petroleum Plc is in the interest of their nearly 200, 000 shareholders and the general public.
If Alhaji Aliko Dangote has personal scores to settle with his business archrival Chief Femi Otedola, he should do so privately and not on the floor of the Nigerian Stock Exchange. Aliko Dangote should not use innocent shareholders as pawns in his desperation to checkmate the advancement of Femi Otedola in the business leadership of Nigeria.
He should not use the shares of AP Plc to learn how to play Chess on the floor of the Nigerian Stock Exchange.

The fact is, without the Yorubas of Femi Otedola’s tribe, Alhaji Aliko Dangote would not have become as rich as he is today, because the majority of his customers or the consumers of his products are Yorubas. His own people the Hausas do not buy as much cement as the Yorubas, because Hausas hardly build houses as the Yoruba landlords who have landed properties from the Western region to the Northern region of the Hausas. Yorubas are the ones who buy most of the products produced and distributed by Aliko Dangote and not the Hausas who hardly indulge in extravagant parties as the popular Yorubas “Owanbe” parties. If the Yorubas should boycott Dangote’s products, the Dangote Group will collapse within 12 months. Imagine what would happen to the conglomerate of Alhaji Aliko Dangote if I make a clarion call to all Southerners from the East and Western states of Nigeria to boycott Dangote’s products and services? The Dangote business empire will crash!

Alhaji Aliko Dangote and his gang of Nova Finance & Securities Limited should stop their mischievous and unethical economic sabotage of “crossing” and devaluation of the shares of African Petroleum Plc at the Nigerian Stock Exchange. Any Dangote Mafia gang-up against Chief Femi Otedola and associates will fail woefully.


The ruling People’s Democratic Party (PDP) of Nigeria connived with Aliko Dangote to use the Nigerian economy to practice monopoly and Totopoly and he monopolized the importation of cement with the support of the corrupt political mafia of the PDP. But the time has come to stop the greediness of Aliko Dangote and demand for equity and probity in the economic development of Nigeria for the mutual benefit of all the citizens and other stakeholders.


Saturday, March 14, 2009

Lying In The Name of God: When Ndi Okereke-Oyiuke Lied


Mrs. Ndi Okereke-Oyiuke

Lying In The Name of God: When Ndi Okereke-Oyiuke Lied

“We thank God that our market did not meltdown as much as many of the advanced stock markets. We thank God that the whirlwind did not blow too hard on our side at a time when several global giants closed shop.”
~ Mrs. Ndi Okereke-Oyiuke, Director-General of the Nigerian Stock Exchange, (NSE) on Monday January 12, 2009.

How can Ndi Okereke-Oyiuke say the Nigerian Capital Market did not do badly in 2008, when the Nigerian capital market crashed woefully?

The erroneous and ambiguous rating of the Nigerian Stock Exchange (NSE) by the International Finance Corporation (IFC), World Bank and Standard & Poor as the 11th out of the 106 exchanges in the world is not an endorsement of the Nigerian capital market and does not mean that the Director-General of the NSE did not lie.

According to the report of Mr. A.G. Olisaemeka, the meltdown of the Nigerian capital market led to the crash of the market capitalization from a record high of N13.5 trillion in early 2008 to less than N4.5 trillion in early 2009.

Both Mr. Chukwuma C. Soludo, the Governor of the Central Bank of Nigeria (CBN) and Mrs. Ndi Okereke-Oyiuke have erred and lied about the state of Nigerian banks and the Nigerian capital market, because their statements have been proved to be false by the facts of the prevailing realities of the Nigerian economy.

Corruption is the bane of Nigerian banks and the anathema of anyone who is a true patriotic citizen of Nigeria. It is within the ambit of the Governor of the apex bank and the DG of the NSE to direct the course of the Nigerian economy by being honest and transparent, but they have become either shareholders or apologists of the corrupt leaders and investors who are the cankerworms of corruption in Nigeria. Their erroneous analysis of the financial crisis is the wrong diagnosis of the Nigerian economy. Their comparative analysis of the global financial crisis is wrong.


The meltdown of the Nigerian capital market is as bad as the ones Mrs. Okereke-Onyiuke called “global giants”, because the meltdown caused the massive withdrawal of foreign investors from the Nigerian capital market. But while the governments of the so called “global giants” have already implemented practical bailout plans, the Nigerian government is lagging behind in the implementation of an effective economic stimulus plan. In fact, presently, the Nigerian government is confused.

I have already passed a Vote of No Confidence on the corruption-ridden banks in Nigeria, except for the bank I can vouch for, Guaranty Trust bank (GTB). I do not need any pink account where the colour is tainted with the bad blood of blood money from illegal oil bunkering, misappropriation of public funds meant for Nigerian General Hospitals, Teaching Hospitals and Health Centres, and the embezzlement of the public funds meant for the construction of safe roads and regular power supply. The same criminals and enemies of the state who embezzled these public funds are the major shareholders and investors in Nigerian banks and other listed companies. These same criminals love using the name of God at their Annual General Meetings (AGMs) while smiling and still lying through their teeth in their annual reports.

There is time for everything, and the clock is ticking for D-Day, when we shall know for whom the bell tolls, for their judgment shall be according to their violation of the commandment: "You shall not make wrongful use of the name of the Lord your God, for the Lord will not acquit anyone who misuses his name”. Except they are fools. But as fools lie, so fools die.
Finis.

Anarchy In The Economy:No Dollar To Buy



Which way Nigeria in 2009:Economy in shambles
Vanguard Online Edition - Saturday, 14 March 2009



Thursday, February 5, 2009

The Meltdown of the Nigerian Capital Market: Causes and Consequences


The Nigerian Stock Exchange

The Meltdown of the Nigerian Capital Market: Causes and Consequences

By A.G. Olisaemeka


The current crash of the Nigerian Capital Market as been
unprecedented in its historic evolution since 1960 to date. Its market capitalization has nose-dived from an all time high of N13.5 trillion in March 2008 to less than N4.6 trillion by the second week of January 2009. Besides, the All-Share Index (a measure of the magnitude and direction of general price movement) has also plummeted from about 66000 basis points to less than 22000 points in the same period. The stock prices have experienced a free-for-all downward movement regime with more than 60% of slightly above 300 quoted securities on constant
offer (supply exceeding demand) on a continuous basis. Consequently many of the quoted stocks lack liquidity as their holders are trapped, not being able to convert them to cash to meet their domestic and other investment needs. On the other hand, fresh investors are cautious of jumping into a vehicle that does not seem to have a brake should they wish to disembark.




A number of factors have been blamed for this sorry state of affairs and they include:

1. A Global Phenomenon
The present seeming collapse of the world economy has not excused that of Nigeria. Many stock markets of countries, from USA to Britain, from China to Japan, Russia, France and others are in serious trouble. The world is indeed a global village and the interrelatedness of world economies is very evident that any development in any part of the world affects other parts as well. Consequently, the Nigerian capital
market is not insulated from this global malignant cancer.

2. Pull-Out of Various Foreign Investors
This is another factor believed to have contributed to the continuous fall of the Nigerian stock market. Many foreign investors that already have troubles in their home economies have pulled out of the Nigerian stock market leading to dumping of shares beyond the ability of domestic investors to contain. Supply of equities has, in consequence of this, overwhelmed demand, leading to price fall. According to the Director-General of the Nigerian Stock Exchange, Prof. Ndi Okereke-Onyiuke, "…available statistics shows purchase by foreign investors during 2008 to be in excess of N150.135 billion representing 6.3% of the aggregate turnover. This is a decline when compared with the N256 billion recorded in 2007. Concurrently, total sales during the year were in excess of N556.93 billion, culminating in a net outflow of about N406.8 billion."

3. Lack of Infrastructure and High Production Costs

The cost of doing business is high in Nigeria. Basic infrastructures like good roads, power supply are lacking, leading to high cost of doing business. Many quoted and unquoted companies like Dunlop Nigeria Plc and Michelin Nigeria have closed down shops. Most of the textile industries have also stopped production, leading to the crash of their share prices. The shares of Dunlop Nigeria Plc that sold above N6 per
share a few months ago now trade below N0.6 per share. Evidently, high production costs reduce profitability or increase loses which also impact negatively on the share prices.


4. Impact of Commercial Banks
Following the forced capitalization of banks to a minimum of N25 billion, almost all banks utilized and accessed the capital market to raise funds. Within two years plus, many of the banks besieged the capital market more than once, falling over one another in raising funds through mega offers in a single tranche. The banks competed to suck every liquidity from the Nigerian financial system, thus overheating it. Through enticing marketing strategies, the banks succeeded in their various offers, but left the capital market place bleeding and gasping for breath. The primary market seemed to experience a boom while the secondary market was sucked dry as many investors dumped their shares in the secondary market, in favour of
the primary market offers achieved through bewitching marketing efforts of banks. A total of N2.2 trillion was raised through various public offers dominated by the banks in 2008. Much of this came through disposal of shares in the secondary market.


5. Avalanche of Private Placement Offers

A number of private companies did private placement of their shares at lower prices while they sought or intended to seek quotation of their shares at higher values on the Nigerian Stock Exchange, thus making such private placements very attractive. This lured investors to dispose or dump their shares in the secondary market, purchase the private placements and dispose of same immediately after their listing
on the Stock Exchange at higher prices. The Nigerian capital market thus became a battleground as private companies were falling on each other through avalanche of offers. The regulating bodies were impotent as the Investment and Securities Act, 2007, does not place private companies under their control. A number of companies that did private placements to suck liquidity from the Nigerian capital market,
include: Investment and Allied Plc, Globe Reinsurance Plc, Multiverse Ltd, Swap Technologies Ltd, Starcomms Ltd, Equity Assurance Plc, Oasis Assurance Plc, IHS Ltd, Indomie Nigeria Ltd, Tetrazzini Ltd, Food Concepts Ltd, Geolfluids Ltd, Goldlink Insurance Ltd, Universal Insurance Ltd, Chams Plc, Fidson Health Care Plc, Reltel Wireless Ltd, MTN Ltd, etc. Thus so much liquidity was sucked from the Nigerian
capital market in favour of private placements of private companies, many of which remain unquoted till date, leading to the crash of the Nigerian capital market.

The Director-General of the Nigerian Stock Exchange, Prof. Ndi Okereke-Onyiuke admitted this fact in her review of the performance of the Nigerian capital market when she observed inter alia "…a significant portion of funds that left the stock market for private placement market are still locked-in as many of the issues have not applied to the Nigerian Stock Exchange for listing…."


6. Banks Short-Term Orientation Imposed on Long-Term Capital Market

At a time, banks were financing about 65% of the Nigerian capital market through margin facilities granted to investors and stock broking firms. Many banks abandoned or sidelined their core operation of providing credit to the real sector in favour of "playing" the capital market for short-term speculative activities that seemed to pay off up to March 2008 before the cancer that afflicted the market set in. It is estimated that the total exposure of banks to the capital market in terms of trapped funds is in excess of N1 trillion. Thus, the capital market place became overheated with so much speculative activities of banks that by the time the market caved in,
it became difficult for them to exit through the narrow door as there were no mega investors to "check them out". The Nigerian capital market was no longer seen as a market for long-term funds, but that of a short one. The banks embarked on unguarded short term treasure hunting spree from the capital market as their speculative activities soon overheated the capital market.


7. Inability of the Federal Government to Plot a Bailout Option

There were blunt statements from the Federal Government that it will not intervene directly in the capital market which it sees as a purely private affair. The government lacked the wisdom to examine the socio-economic implications and chain effects of a failed capital market. It therefore became impotent of hatching a bailout plan for its beleaguered capital market unlike the governments of USA, Britain, France and so on, playing politics with such a sensitive issue that borders on "life and death". Thus the government outright refusal to intervene directly in the crashing stock market has depleted any hope of a possible market rebound leading to further loss of confidence among investors. This has sparked off supply of shares by desperate investors who, having seen no hope in the horizon, wish to cut their losses short by rushing to sell at any price.

8. Structural Deficiencies of the Nigerian Stock Market

There appears to be some inadequacies of the Nigerian capital market, especially the absence of market makers. As at third week of January 2009, the Nigerian Securities and Exchange Commission (SEC) has licensed five market makers, but the Nigerian Stock Exchange was yet to also license them due to avoidable administrative bottlenecks. Thus, there are no functional market makers that can provide exit windows for investors who wish to check out.


9. Regulating Inconsistencies and Pronouncements

The apex regulator of the Nigerian stock market, the Securities and Exchange Commission, prior to the crash of the market had alleged publicly that stock market prices were being manipulated and it announced that it was probing some quoted companies, such as Dunlop Nig. Plc, Eternal Oil Plc, Capital Oil Plc, and so on. Following the publication, investors became afraid that such statements coming from
the principal regulator evidenced the existence of unrealistic prices of all stocks, thus provoking panic selling of stocks among investors. This contributed to the crash of the market. Unfortunately till date, not much has been heard of the outcome of the SEC investigation that transmitted shockwaves down the spines of investors.

Opportunities of the Capital Market Meltdown

The current meltdown of the Nigerian capital market has provided excellent opportunities for both local and foreign investors to grab the shares at rock-bottom prices with the greed of a hungry lion. There appears to be no better time to buy the shares in the Nigerian capital market than now. The fundamentals of the Nigerian capital market are still very strong- high earnings per share, high dividends per share, high earning yields, high dividend yields, good bonuses and low price earning ratios. With the complete internationalization of the Nigerian capital market, foreign investors can acquire up to 100% of Nigerian companies and exercise full control. It is believed that the acquisition opportunities offered by the current capital market meltdown in Nigeria can only come, but once-now! Corporate hawks
should be on the prowl now.

10. Pressure from Banks
Following the more than N1 trillion of banks’ funds tapped in the capital market, the banks have become violent on the borrowers of funds (investors and stock broking firms) used to acquire shares. Currently these banks have brought suicidal pressure to bear on these borrowers, compelling them to sell their shares at any price, just to have a moment of respite. This has further increased the supply of shares at ridiculous prices, leading to greater market crash.



Consequences of the Market Melt doom.

The meltdown of the Nigerian capital market characterized by the crash of the market capitalization from a record high of N13.5 million in early 2008 to less than N4.5 trillion in the corresponding period of 2009 has manifested the under listed costs and consequences.

1. Loss of confidence in the Nigeria economy, as many investors prefer to convert their naira to foreign currencies, especially the dollar and hold them through their domiciliary accounts. This has in part led to worsening exchange rate against the naira.

2. Mega losses by investors in the capital market whose total losses are not below 2/3 of their investment before the meltdown. In other words, investors now have less than one third of the value of their investments before the free-for-all fall.

3. Trillions of naira – what remains of the capitalization – tied down in unsaleable stocks. Most of the securities are on serious offer – an indication that there are no willing buyers to check out any investors who wishes to do so. Here investors not only contend with their losses to date, they also contend with a supply glut that they seem trapped with the remaining securities in their sad possession.

4. Over exposure of investors and stock broking firms to banks. Before the meltdown, banks engaged in lending frenzy through margin account. Borrowers were required to contribute 30% while the banks contributed 70% and the entire 100% was used for stock speculation. Currently the market meltdown has wiped out the investors 30% contribution, while half of the banks 70% have also been wiped out. Notwithstanding this scenario, the banks are still calculating interest on daily basis and posting to the debit of the borrowers account investors and stock broking firms, thus to sting perpetual liabilities on the borrowers which only Divine intervention can save these borrower from the hangman – the banks.

5. The market meltdown has also led to credit crunch in the economy as banks do not have enough to lend to the productive sector leading to high interest rate. Given that interest rate – cost of fund to manufacturers is a very significant component of cost of production, this translates to higher prices of goods and services, leading to inflation.

6. The meltdown has also led to the loss of confidence of banks and other lenders on shares as collateral for loan facilities. Shares which were before now readily accepted by banks as collateral are now shunned by them. The few of them that dare to touch them for this purpose only do so with a hundred meter pole, at ridiculous discounts as some of them seek up to 300% cover.

7. The market meltdown has led to loss of depositors funds with the banks. It is estimated that banks are exposed to the capital market in excess of N1 trillion through loss in the value of securities for which margin facilities were granted investors in Nigeria. This has significantly increased the quantum of banks non-performing assets – Toxic assets.

8. The market meltdown has also induced massive withdrawal of foreign investors from the Nigerian financial system, damping the remaining source of hope for possible market recovery.

9. Loss of value of pension Asset. Following the passage of the Pension Reform Act, 2004, pension assets are now privately managed. Under the Act, every employer, whether in the private or in the public sector is obligated to deduct 71/2% of every employee’s emolument, then add another 71/2% totaling 15%. This is remitted on monthly basis to a pension asset custodian under the superintendence of a pension fund administrator. The PFAs manage the pension assets by investing in a variety of instruments including equities. The PFAs also maintain retirement savings account for employees showing the monthly deductions remitted on their behalf as well as the profits or losses arising from their investments. It is estimated that more than N2 Trillion of pension assets has gone down the drain casting doubts on the ability of PFAs to repay retirees their pension and gratuities.


10. Inability of stock broking firms to settle their clients for securities sold. With the current meltdown, many stock broking firms cannot discharge their obligation to their clients. Proceed of shares sold by these stockbrokers for their clients are greedily seized by the banks to whom the stock broking firms are owing billions of naira through margin accounts. Incoming credits or debits arising from sale of securities or purchase of securities can only be settled through the appointed settlement banks. This gives the banks the opportunities to absorb any incoming credits to service huge margin facilities granted to stockbrokers. Thus many stock broking firms rejects sale orders as they know that the banks will seize the credits, leading them to contend with their clients.

11. Loss of Confidence in the regulatory bodies.
There appears to be a loss of confidence on the regulatory bodies of the Nigerian Stock Exchange as well as the Securities & Exchange Commission whose regulatory impotence has been largely blamed for the present woes of the capital market and whose principal officers appear to have exhausted all they know and all they can offer to change the fortunes of the market. Many market analysts believe that they ought to have thrown in the towel instead of trying to stay put and superintend the "funeral mass' of the market as they have nothing again to offer.

12. On a positive note, the Nigerian Capital Market meltdown has compelled investment diversification to other assets, especially real estate and government bonds. Investors now scamper for safety rather than high returns at the expense of possible huge or near total losses which equity investment symbolizes –where the investor either enjoys too much or suffers too much.

The market meltdown: The Way out

Only physical injection of funds can change the direction of the market. No amount of grammar from "this-ism" to 'that-ism" will avail. With the present liquidity crunch and investors loss of confidence, it is not reasonable to expect salvation from individual and institutional investors. A strong government bail-out as obtains in USA, Russia, Britain and Singapore, is the magic wand needed to be waived in the four corners of the market. The issues of government intervention should not be politicized. The Nigerian Capital Market is not a southern affair. Already the effect of its meltdown may give rise to the collapse of many banks whose hundreds of billions of naira are trapped unless urgent government intervention is articulated and hurriedly implemented.

© Nigerians Report 2009.All rights reserved.

~ A.G. Olisaemeka is a chartered stock broker and consultant on financial matters on doing business in Nigeria. He is the Author/Editor of Scientists Discover Hell: As Astronauts Find Heaven distributed by Amazon.


Tuesday, January 13, 2009

Nigeria: Nigerian Banks in Trouble!


Can Nigerians trust Nigerian Banks when most of the banks belong to those who have links to money laundering schemes and corrupt practices?

The Nigeria Deposit Insurance Corporation(NDIC)should investigate the activities and accounts of the following Nigerian banks:

1. Bank PHB Plc
2. Zenith Bank Plc
3. Spring Bank Plc and
4. Skye Bank Plc.

Bank PHB Plc is about to acquire the majority shareholdings in Spring Bank Plc, but there is large scale sharp practices reported at the popular Bank PHB and the financial interests of the President of the Federal Republic of Nigeria, Alhaji Umaru Yar'Adua in this bank should be open to the public. The NDIC should investigate the bank for large scale fraud. The source of income of every member of the Board of Directors of Bank PHB should be queried.

The Economic and Financial Crimes Commission (EFCC) may have dropped the charges against Mr. Jim Ovia, the MD of Zenith Bank Plc, but there are still many unresolved issues that the NDIC must address if Mr. Ovia deserves the 'administrative bail,' while his managers are still being held over the N3.2 billion deposits by the Rivers State Government.

The NDIC should also investigate Skye Bank Plc and Spring Bank Plc, because they are not healthy.


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