…….. Warns Against Unapproved Channels For Share Subscriptions By Banks
The Association of Securities Dealing Houses of Nigeria (ASHON) has raised concerns over banks’ bypass of stockbrokers in share subscription process in the current recapitlisation exercise.
In a statement made available to THE WHISTLER, the association stressed the need for issuers and investors to comply with capital market rules and established practices.
“It has come to the notice of the association that in a desperate move to mobilize funds to comply with the new capital requirement as directed by the Central Bank of Nigeria (CBN), some banks have devised means of bypassing Stockbrokers as Receiving Agents,” the statement signed by ASHON Chairman, Mr. Sam Onukwue said.
Onukwue noted that these banks have handed over their Shareholders Registers to their staff, including drivers and receptionists to issue and receive Share subscriptions forms to investors, thereby bypassing stockbroking firms who are the registered Receiving Agents.
According to him, such completed Offer Forms are then passed directly to the bank, its branches and subsidiaries (including Registrars).
In addition, he said they have opened unapproved dedicated portals as a marketing strategy to mine investors’ information and constrain investors to domicile their accounts with their subsidiaries instead of their Stockbrokers.
He noted that by these devices, opportunities for fair marketing has been denied stockbrokers, adding that this act is at variance with the acceptable procedure where stockbrokers have the primary duty to market shares and offer investment advice to investors.
Onukwue noted that the ongoing unorthodox channels of share subscription deny innocent investors of opportunity of making appropriate investment decisions in line with their investment objectives, risk tolerance , time horizon, and source of fund amongst others.
“We also fear the likelihood of abuse of the process, as in the 2005 bank recapitalisation where stockbrokers were wrongly blamed for infractions committed by banks.
We hereby advise issuers and investors to deal directly with Trading Licence Holders who are members of ASHON in order to be availed sound professional advice ahead of any share subscription.
The firms are duly registered and regulated by the SEC and licensed by recognised securities market platforms.
The list of recognised Trading License Holders or dealing -member firms is available on the website of Securities and Exchange Commission (SEC); www.sec.gov.ng; Nigerian Exchange Limited (NGX); www. ngxgroup.com and ASHON; www.ashonng.org,” he said.
