The purge continues as SEC revokes 53 licenses of fund managers …suspends issuance of new licences for next 6 mths

The Securities and Exchange Commission (SEC) has revoked the licences of 53 fund management firms or investment banks for becoming insolvent, unable to pay clients funds, and violating several investment rules.

The SEC, as a result, has promised to not issue any new licences for the next six months. The total Assets Under Management (AUM) of the affected companies is in excess of GH¢8billion with an estimated 56,000 customers affected.

Out of the 53, the SEC noted that 21 of them have already ceased operations with the other 32 currently in operation. Some of the biggest investment banks that have had their licences revoked include Beige Capital Asset Management, McOttley Capital, All-Time Capital, and Blackshield Capital Management (formerly Gold Coast Fund Management).

The rest include Firstbanc Financial Services, Frontline Capital Advisors, Galaxy Capital, Ideal Capital Partners, Liberty Asset Management, Nordea Capital, Omega Capital, Unisecurities Ghana, and Intermarket Asset Management Limited (formerly CDH Asset Management).

In a statement, the SEC noted that these companies, essentially, have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions, despite opportunities provided to them by the SEC within a reasonable period of time to resolve all regulatory breaches.

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“The SEC has concluded after extensive engagement with these institutions that their continuous existence in the light of their conduct poses severe risks to the stability of the capital market and to the interests of investors,” it said in its statement.

The regulator noted that the authorized agent of SEC (and the Liquidator once appointed) will work together with the government to pay a capped amount to all affected investors of these firms in line with government commitment to support the securities industry and to provide some immediate relief to investors who are hurting because of their locked-up funds.

The outcome of the court process will inform the handling of assets retrieval and liquidation to further sort out validated investor claims,” it said.

No panic withdrawals

The SEC assured that it will, together with its authorized agent, provide further details about the validation process and specific locations where investors can present their claims to be validated.

“In the interim we urge all investors to remain calm, gather all receipts, statements and any other documentation related to their investment with the affected institutions. There is also no need for any panic withdrawals on the firms whose licences are intact and not on the revocation list.”

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The SEC, the statement added, is committed to ensuring that the fund management sub-sector remains supportive of the capital market growth and the economy as a whole. The SEC will continue to regulate and promote the growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected.

What is SEC doing next?

The SEC noted that it will deepen its capacity at the Commission in terms of training, development and recruitment. Also, it will be digitising its operations to inject greater efficiency of how it receives returns from the market and analyse these returns.

The SEC added that it will be strengthening its on-site and off-site inspections, strengthen complaints handling and making the acquisition of new licences very rigorous. Already, the regulator has increased the minimum stated capital from GH¢100,000 to GH¢2million.

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