The Securities and Exchange Commission (SEC) has offered clarification regarding the delay in distributing bailout funds to customers of Blackshield Fund Management.
This delay, SEC explains, primarily stems from legal action taken by the company which contested the liquidation petition initiated by the Official Liquidator upon revocation of the company’s licence.
“We wish to state that the delay in payment of bailout funds to affected customers is not due to the Ministry of Finance’s refusal to provide funds. The delay is principally due to the legal action by Blackshield/Gold Coast contesting the liquidation petition brought by the Official Liquidator (Office of the Registrar of Companies) at the request of SEC following the revocation of licences. The SEC will continue to support the Official Liquidator in pursuing the liquidation petition in court,” SEC said in a press statement.
This comes in the wake of Blackshield/Gold Coast customers engaging in a 48-hour picketing protest at the Ministry of Finance. This protest follows previous engagements between the SEC and aggrieved customers who protested at the SEC premises in May 2023.
The SEC revoked the licences of 53 Fund Management Companies (FMCs) on 8th November 2019 due to various regulatory breaches, including their inability to return clients’ funds which were estimated at GH¢8billion. This action was taken to protect investors, safeguard the integrity of the capital market and mitigate financial stability risks.
Following the licence revocation, the SEC initiated several measures to protect investors and facilitate the bailout programme; including notifying the Registrar of Companies to petition the Court for official liquidation orders of the affected FMCs. The SEC also secured a bailout package from government with certain conditions, including court orders for liquidation and the validation of claims by claimants.
The SEC clarified that a full bailout has been extended to affected clients of companies where liquidation orders have been granted by the courts, while a partial bailout has been implemented for cases where the liquidation petition is still pending. So far, GH¢4.6billion has been disbursed with GH¢3.1billion assigned to Amalgamated Fund Tier 1 payments, and GH¢1.45billion assigned to Amalgamated Fund Tier 2 payments. This includes the proactive payment of up to GH¢50,000 to clients of Blackshield/Gold Coast and other companies whose claims were validated but had not received winding-up orders by October 2020. A total of GH¢757,539,141 has been used to fully settle 61,734 claims of Blackshield/Gold Coast customers.
However, full coverage for Blackshield clients remains pending due to litigation initiated by Blackshield/Gold Coast that has delayed the process of obtaining a winding-up order from the court. Furthermore, the approval from parliament for the bailout funds has lapsed – requiring the approval of Cabinet and parliament for any additional expenditures.
The SEC stressed that full disbursement of bailout funds can only occur after claims validation and a winding-up order by the court, in compliance with relevant legal provisions. The ongoing court process between the Office of the Registrar of Companies and Blackshield/Gold Coast is a significant factor in the delay.
The SEC urged affected clients to rely on information provided by the SEC and Official Liquidator, appealing for calm and understanding during these challenging circumstances. They encouraged affected investors and the general public to contact the SEC for further information and assistance.
Blackshield reacts
Meanwhile Blackshield in a reaction said SEC did not allow due process to play out per their own regulations before deciding to withdraw the BlackShield Capital Management Limited’s (BlackShield) license.
SEC refused to assist BlackShield to collect what is now over GHS5 billion in principal and interest owed to the company and its related companies by government institutions, saying that “…it is not a debt collector”. SEC knows that Parliament did not impose any conditions for the payment of validated funds due to customers of fund management companies including BlackShield. We ask, why is SEC using “liquidation” as a condition for payment?
We will not go further than this. We will respect the judiciary processes still going on with the belief that our rights will eventually be restored.
We urge those responsible to pay what is due to BlackShield Capital Management Limited and related companies so that what is due to our customers per our records, can be paid to them.
