Investors who lost N700 billion in private placement fraud have renewed their appeal in response to persistent inflation and other socioeconomic problems.
Investors have urged regulators to take action against companies who broke their commitments to list their shares on the Nigerian Exchange Limited (NGX) in order to make a profit on their investments 16 years after the issuing of the private placement.
Additionally, they have demanded that the Companies and Allied Matters Act (CAMA) be reviewed in order to make it essential for businesses seeking private placements to list within a set period of time following issuance. They said that doing so boosts compliance rates and rebuilds investor confidence.
The Securities and Exchange Commission (SEC) had indicated that it does not oversee private placements by private entities, but investors demanded that given the size of the money involved in the scheme, the regulators should do more than just say they are concerned.
They contend that businesses that had participated in private placements during the bull market of the 1990s have exhausted their cash reserves and failed to list their shares on the secondary market as promised.
They pointed out that many investors who had money stranded during the time are presently experiencing extreme hardship without any means of income as the nation struggles with growing living expenses.
Many retail investors’ financial success is influenced by the market, either directly (via investments) or indirectly (through pension funds). According to Eric Akinduro, president of the Ibadan zone Shareholders Association, retail investors have become quite apathetic and have lessened their capacity to participate in the market as a result of the trapped fun, which was made worse by the 2008–2009 global financial crisis.
He claims that given the recent progress in domestic equity participation, now is the time to crack down on the involved corporations and use the heavy stick to punish them. He pointed out that although several of the corporations were successful in obtaining over N700 billion through their bids, a large percentage of the funds were diverted to other investment opportunities.
He encouraged the authorities to take the required steps to look into the matter in order to lessen the suffering of investors, stressing that the regulators already have information on the worried investors.
“The investors’ fund trapped in the private placement is a thing of concern to the investing community. When you look at the magnitude of the funds, it is unfair for the regulators to keep quiet if they are protecting investors.”
“However, investors have to learn their lessons. Due diligence and proper investigations are needed before one put hard-earned money into private placement. Some of the private placements are scams and the regulators warned investors than to stay clear of such companies.”
Patrick Ajudua, president of the New Dimension Shareholders Association, questioned why none of the company owners had been detained for running unlawful businesses and keeping investors’ funds withheld.
He claimed that the Securities and Exchange Commission (SEC) has the authority under the Investing and Securities Act to bring legal action against any corporation engaging in such acts, whether or not they are registered with the commission.
In order to prevent a repeat, Ajudua encouraged the SEC to step up its campaign against investing in businesses and organizations that are not registered with the agency.
Moses Igbrude, the National Coordinator of the Independent Shareholders Association, said the SEC has the difficult duty of protecting investors in his remarks.
He believes it is improper for authorities to remain silent while executives of businesses that have deceived investors roam around freely and profit from their schemes.
According to Ajudua, the problem has caused a liquidity crisis in the market’s equity segment and depressed it since individual investors lack the purchasing ability to support the market.
He pointed out that the stock market would have the necessary finances to expand activity and draw in additional investors if some of the money is recovered and used there.
“Why would anyone take money from the public without the knowledge of SEC? We are calling on the regulator again to do their job and bring the perpetrators to book to serve as a deterrent to others,” he confirmed.
Moitie still hazy to me. That shareholders still owed this much from the Sec.