- Validation process is ongoing
- Total client claims now stand at GH¢3bn (from GH¢12.6bn)
- 71,000 individuals, 5,750 institutions make claims
- Government committed to intervene
- Commission pursuing changes to law to gain more powers
- 13 out of 18 CIS transferred to new fund managers
The Securities and Exchange Commission (SEC) is in talks with the Ministry of Finance to secure a comprehensive solution for customers of the defunct investment banks who have their monies locked up, as the validation process for the 90,000 claims received from 71,000 individuals and 5,750 institutions picks up pace.
Even though government provided some GH¢1.5billion in the 2020 budget to support the customers affected by sanitisation of the asset management industry, the value of claims received so far and ongoing validations point to the fact more options have to be considered to fill the gap, said Rev. Daniel Ogbarmey Tetteh, the Commission’s Director General, in a meeting with some journalists.
“We are in extensive engagements with the Ministry of Finance to go beyond the GH¢1.5billion and make that commitment firm, and hopefully we will get there. What we need now is to find out the total exposure for presentation to government, and I am confident that will happen in the coming weeks. We are pushing hard, so we get something to the ministry to signal what can be done,” Rev. Ogbarmey Tetteh added.
To buttress his point on the need to validate the claims filed by customers, he noted that at the time of revoking those licences, the assets under management of the firms involved stood at GH¢8.08billion; but the total value of claims filed as at April 2020 stood at GH¢12.56 billion. “That is a GH¢4billion difference, which underscores why the validation process needs to be very rigorous,” he said.
Acknowledgement is not validation
So far, the Director General noted, most of the claims filed have been acknowledged – but stressed that an acknowledgement is not a confirmation or validation of claim. He explained that the acknowledgement of any claim – or the lack of it – doesn’t make a claim valid or invalid.
“When you file your claim, you get an acknowledgement via a text message; but that is not the same as validation. The validation process involves an agent, appointed by the SEC, to go in and take records, cross-check against your claim; if it is the same, then the agent moves on. If it doesn’t match, then we have to find out what the problem is – including recourse to source documents and receipts, and this takes time,” he said.
Gov’t committed to intervene
Mr. Tetteh pointed out that in a typical liquidation process, creditors would have to wait for the liquidation order to be given so that the Liquidator can dispose of the assets and use proceeds to pay creditors. He indicated that government remains committed to intervening with some support in the event that liquidation proceeds are inadequate to sort out the creditors. This is against the background that a significant proportion of these companies’ assets can be categorised as risky or distressed. He pointed out that the Commission will be in a position to make some announcements on when and how affected investors of these companies will be sorted out in the coming weeks.
SEC needs more powers to police investment banking sector
Explaining the difference in approach of the Commission after revocation of licences and compared to the approach used by the Bank of Ghana (BoG), Rev. Tetteh indicated that SEC is relying on the liquidation pathway as it doesn’t have the power to appoint a Receiver like the BoG. The liquidation pathway differs from that of the Receiver pathway in terms of the process, and therefore it has implications on the time taken to achieve the ultimate goal of sorting out of the affected companies’ creditors (including investors).
“When you have the power to appoint a Receiver, like the Bank of Ghana (BoG) does, the Receiver is authorised to take over running the company and has broad access to everything about the company. Since we do not have that power, we had to notify the Official Liquidator (the Registrar-General) who must apply to court for the liquidation orders. This process takes time,” he said.
Transfer of CIS to new fund managers
So far, the SEC boss noted that out of the 18 collective investment schemes which have been indirectly affected by the revocation of licences, 13 have successfully appointed new fund managers; one was already on the path to liquidation, while the other four have indicated that they are still in the process of appointing new fund managers to continue managing those funds. The new fund managers have been directed to take steps to meet with their respective shareholders/unit-holders to apprise them of the outlook and strategy to manage the funds so as to achieve the set objectives.