Market Analysts Push for SEC’s Independence as Regulator

• Oando says shareholders excited suspension on shares has been lifted

Goddy Egene

Following the latest change in leadership at the Securities and Exchange Commission (SEC), market analysts have pushed for the independence of the commission, with some cautioning that the continuing changes may dampen investors’ confidence in the nation’s capital market.

Their note of caution came a few days after the Minister of Finance Kemi Adeosun removed the acting director general of the capital market regulator, Dr. Abdul Zubair, and replaced him with Mary Uduk. The minister also appointed three acting commissioners for the commission.

Zubair’s ouster followed the suspension five months ago of the substantive head of SEC, Mr. Mounir Gwarzo, whose fate continues to hang in the balance despite the recommendation for his outright dismissal by an investigative panel set up by the minister to probe him.

Gwarzo was investigated for allegedly awarding contracts linked to him and his wife and for paying himself a severance package of N104 million.
The changes, which market operators observed was the third in a spate of five months by Adeosun, has the capacity to slow down activities and affect the smooth running of the capital market which they said made considerable gains in the first quarter of 2018.

Commenting on developments at SEC, a stockbroker, who preferred to remain unnamed, noted that the current acting director general Mary Uduk is eminently qualified to hold the post given her vast experience as a market regulator, but called for the amendment of the Investment and Securities Act by the National Assembly to give the SEC independence like the Central Bank of Nigeria (CBN) to prevent meddling and interference by any ministry.

“The capital market is part of the financial system, and since the CBN was given independence, no person can come and remove its governor without the approval of two-thirds of the Senate.

“This provision was put into the CBN Act to shield it from undue interference and ensure that its principal officers are unimpeded as regulators of the banking system.
“If this was achieved for the CBN, the National Assembly should step in to amend the ISA to give the leadership of SEC and the institution itself the needed independence to regulate the market. That is what obtains with the U.S. SEC after which our own SEC was modelled.

“The game of musical chairs we see in the SEC today is the fallout of the Oando fiasco, leading to he-said, she-said. We don’t even know who to believe any longer and what is worse is that the Oando issue remains unresolved. But if SEC was independent of the finance ministry, all this would not arise,” he said.

Also, the African regional representative of Afribonds, an equity investment firm quoted on the Johannesburg Stock Exchange (JSE), Dr. Ejiro Monidafe, said: “A situation where existing directives and instructions given by an out-gone official do not see the light of day must not be accepted any more. Apart from retarding productivity, it is believed to have become a veritable source of corruption in the system.

“SEC must be able to establish a sound management matrix which would instill a proper level of continuity so that no such sudden change would render an already determined decision from relevant ministries, agencies or other institutions irrelevant.
“This has become important because of the fact that many instructions and decisions which flow into the institution on a daily basis are so important that they must be seen as on-going and not particularly personal, as they are needed in moving the tempo of the market forward.”

A senior partner with Andersen Tax, Clarkson Okooboh, also said: “Because of the sensitivity of the office of the acting DG, any new appointee may be tempted to function independently, but it is the duty of the supervising ministry to emphasise the fact that all approved or recommended materials on the former official’s desk must be made to receive responsible attention for the sake of market stability and confidence.”

He noted that the spate of instability suffered by the capital market in the last 10 years was mainly due to the poor continuity that followed the forceful disengagement of the former director general of the NSE, Dr. Ndi Okereke Onyiuke, which he said was now being replicated at the SEC.

He said this should guide the management of SEC and its supervising ministry in making sure that every decision and instruction already approved from relevant institutions must be critically upheld or implemented.
“This problem started 10 years ago with the forceful disengagement of the former DG of the NSE and because people got away with it, it is now being replicated at the SEC without people looking at the consequences such decisions could have on investors’ confidence and the overall performance of the market,” he explained.

Meanwhile, some shareholders of Oando Plc Monday expressed satisfaction in the rise in the company’s share price by 26 per cent, following the removal of the technical suspension placed on the company’s shares in October last year.
The Nigerian Stock Exchange (NSE) commenced free trading of Oando shares following a directive from the SEC last week. The share price of the troubled energy firm has experienced a price jump from N5.99 to N7.55 after only three days of trading on the stock exchange.

A statement by Oando Monday night quoted one Mr. Babatunde Badmus of the Pacesetter Shareholders’ Association as saying: “We are happy the SEC and the NSE have finally heeded the pleas of minority shareholders like myself.
“It is unfortunate it took six long months to take effect, nonetheless we are pleased to finally be opportuned to reap from the company’s positive operations over the last six months.”

According to the statement, Oando minority shareholders have been the hardest hit since the imposition of the technical suspension. During the period when the company’s shares were placed on technical suspension, the NSE’s All-Share Index gained about 14 per cent.

By virtue of the sustained suspension, Oando shareholders have been unable to benefit from the positive sentiments in the market within this period. Should the shares have been freely tradable, a positive correlation between crude oil prices and the share price of Oando PLC would have afforded the over 270,000 shareholders an opportunity to profit from the inevitable price rally, the statement added.

It also quoted Mr. Tambari an Oando shareholder with the Sokoto Zone Shareholders’ Association to have said: “The lifting of the technical suspension is a breath of fresh air. Every true shareholder of Oando is delighted that we can finally reap a return on our investment.

“It is for this reason I doubt the authenticity of these shareholder groups saying the suspension shouldn’t have been lifted. Haven’t we suffered enough? The public knows that the company is viable, this is already evident in the price jump since the NSE commenced trading.”