Stop dealing in gold-backed depository notes…SEC directs Menzgold

The Securities and Exchange Commission (SEC), the securities industry regulator, has directed Menzgold Ghana Limited to shut down immediately its business of trading in gold collectibles with guaranteed returns to clients – without a valid licence issued by the Commission.

The SEC – in a letter dated September 7, 2018 and addressed to the Chief Executive Officer of the gold buying firm – said: “The SEC hereby directs Menzgold Company Limited to shut down immediately the business of trading in gold collectibles with guaranteed returns to clients which constitutes, in essence, dealing in securities with neither the necessary licence nor disclosures authorised by the SEC. No new contracts should be created and all advertising of the investment business halted with immediate effect”.

The notice further warned that: “Failure to comply with this directive will lead to the SEC employing other relevant measures under the law to enforce compliance”.

The directive, however, did not preclude the company from continuing “its other businesses of assaying, purchasing gold from small-scale miners, and export of gold”.

According to the SEC, the decision was arrived at following investigations into the operations of Menzgold Ghana Limited since 2017, including paying a working visit to the company’s head office on August 23, 2018.

SEC, after the working visit and subsequent receipt of further information from the company, concluded that the aspect of Menzgold’s business that involves the purchase or deposit of gold collectibles from the public and contracts issued with guaranteed returns to clients is a capital markets activity under Act 929 without a valid licence issued by SEC – contrary to section 109 of Act 929 with consequences under section 206 (1) of the same Act.

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The Commission viewed this activity as an issuance of gold-backed depository notes to the public.

The SEC action follows warnings issued by the Bank of Ghana for the investing public to desist from doing business with the company.

The BoG, in a public notice issued in August and signed by Mrs. Caroline Otoo-Secretary to Governor Dr. Ernest Addison, said in spite of warnings Menzgold persists in its deposit-taking activity – in breach of section 6(1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

The central bank warned that it will not be liable in the event of losing one’s investment.

Menzgold’s reaction

Menzgold Ghana Limited has condemned what it describes as the needless leak of a meeting it had with the Securities and Exchange Commission (SEC).

In a swift reaction, the gold trading company in a statement finds it very unfortunate that a letter relating to business discussions between the organisation and Securities and Exchange Commission has found its way to the public.

Menzgold, in the wake of the Bank of Ghana warning for the public to desist from doing business with the organisation availed itself to all relevant State Institutions for various consultations and dialogues designed to arrive at a productive and sustainable resolution.

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“One of such organisations is the Securities and Exchange Commission with whom we have been hopeful of arriving at a cordial resolution to all matters, if any; then we submit to its standards if we must,” it said.

“This needless leak is believed to be coming from the Securities and Exchange Commission, and to say the least it’s in very bad faith and distasteful as it defeats our confidence in the body and is an affront to cooperation. We totally condemn it!

“As a law-abiding organisation, we have referred the matter to our lawyers – and rest assured, the right action shall be taken.

“We hereby assure all our cherished customers that neither Menzgold as a business entity nor any of its products has been shut down. We urge calm as we deal with this matter to its logical conclusion,” it ended.

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