SEC threatens Ponzi Scheme operators, shifts focus to Non-Interest Issuance, Unclaimed Dividends

The Securities and Exchange Commission (SEC) has said it will now shift its focus on encouraging states of the federation and corporate bodies to issue non-interest investment tools.

The Director-General of SEC, Mr Lamido Yuguda, explained that the reason for this move is to attract capital into the market.

Speaking on Thursday at his first Capital Market Committee (CMC) meeting as the head of the apex capital market regulatory body, he said the issuance of non-interest debt securities will deepen the market.

“We have seen how successful Sovereign Sukuk issues have been, and wonder why we are yet to have sub-national and corporate issues.

“We must end the barriers and remove them, as this will help deepen the market and attract more capital into it,” Mr Yuguda said at the virtual meeting.

Recall that in 2017, the federal government issued N100 billion non-interest-bearing bond otherwise known as Sukuk to investors. The exercise was embraced by subscribers.

At the last exercise held in June 2020, the third since its introduction three years ago, the sale attracted a very high level of subscription from market participants, who staked N669.1 billion on the N150 billion auctioned by the Debt Management Office (DMO), representing a subscription level of 446 per cent, with N162.6 billion eventually allotted.

Proceeds from the sale of the debt instruments were only handed over to the Minister of Works and Housing, Mr Babatunde Raji Fashola, last month to be used to finance 44 federal roads spread across the six geo-political zones of the country under the Sukuk roads project.

The SEC chief at the CMC meeting said the agency was looking at more of the non-interest issuances to make the capital market more attractive.

Also, he expressed worry at the quantum of unclaimed dividends in the market, saying the commission will pay attention to issues around e-dividend.

“To this end, we shall be paying attention to issues around e-dividend and the quantum of unclaimed dividends we have. We believe that to make retail investors return to the market, their concerns must be addressed. Market conduct must also be improved, and bad behaviour rooted out,” the SEC chief said.

In addition, he pledged to clamp down on illegal operators luring unsuspecting investors in the market, stressing that they were becoming a nuisance to the capital market.

According to him, the commission would further strengthen its enforcement regime and ensure that erring market operators were duly penalised to protect investors, noting that SEC needed to restore investor confidence in the market.

“The commission recognises that a fair, transparent and orderly market, with a sound regulatory framework, can promote trust and restore this confidence.

“In turn, this improves the credibility of the capital market necessary to attract retail, institutional and foreign participants. We will also be focusing on the investor experience, seeking to make it easier for the investor to understand and access the market,” the DG said.