Exchange strengthens penalties for errant firm
To strengthen its existing rules, the council of the Nigerian Stock Exchange (NSE) has approved “certain penalties” for dealing with members who violate market rules governing their operations.
The NSE, in a circular to all member firms said, “At its meeting held on 16th March, 2011, the Council of the Exchange approved certain penalties for breach of the Rules and Regulations Governing Dealing Members (Rules).”
The Exchange said it has presented “an exposure draft of the recommended penalties” to market dealers for comments and contributions from last Friday to the 25th of March, adding that “implementation of the recommended penalties will take effect after a review of all comments and contributions.”
Some of the recommended penalties in the draft include issues on unauthorised sale securities, verification of shares in connivance with another, misappropriation of funds, third party transactions, and maintenance of clients’ accounts.
Others include issues on appointment of a compliance officer, rendition of financial statements, and extension of time for submission of annual financial statements.
Sale of fake securities
On the issue of unauthorised sale securities, the NSE said:
“In no circumstances shall a dealing member that sells securities without the authorisation of the owner be permitted to keep any benefits accruing from such sales, including but not limited to bonuses, rights, cash dividends, capital appreciation, and any profit whatsoever.”
It added that a dealing member that sells securities without the authorisation of the owner shall “be required to buy back the securities; and where the sale transaction is N5 million and below in value, be liable to pay a fine of N100,000 and N5,000 for every day from the day of the unauthorised sale until the day the dealing member completes buying back the shares for the owner.
“Or where the sale transaction is above N5 million in value or the dealing member had engaged in such unauthorised sale of securities on a previous occasion, shall have its dealing licence withdrawn by the Council of the Exchange and shall in addition pay a fine of N100,000 and N5,000 for every day from the day of the unauthorised sale until the day the dealing member completes buying back the shares for the owner.”
However, it said that “no dealing member shall have its licence withdrawn unless the Disciplinary Committee of Council has made a finding that the dealing member engaged in the unauthorised sale of securities and has made a recommendation to Council that the licence should be so withdrawn, provided always that during the pendency of any investigative or disciplinary proceedings, the Dealing Member shall be suspended from trading.”
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