Economy
How Operators, Companies Plotted to Dupe Investors in 2008—SEC DG
By Dipo Olowookere
Prior to the crash of the global economy in 2008, the Nigerian capital market was the darling of many local investors, attracting many people, with good amount of money made by regulators, investors, stockbrokers and companies. It was a time money was flowing in the country like a river.
But in this, some investors had a very sad tale to tell because they lost huge amount of money during the period, which the country may never experience again.
Companies were listing their shares on the Nigerian Stock Exchange (NSE) at premium rates and some others promised to join the exchange after private placements, which never came.
Last week, the Securities and Exchange Commission (SEC) held a joint conference with the Department of Finance of the University of Lagos (UNILAG) and the acting Director General of the agency, MS Mary Uduk, explained why some investors became victims of private placement ‘fraud’ during the period.
Commenting on the private placement bubble of 2007 and 2008, the head of the apex regulator in the nation’s capital market said this happened with the connivance of many market operators who encouraged issuers to take advantage of loopholes in the relevant investment laws at the time.
She lamented a situation where many private companies took advantage of gaps in Nigerian laws, especially between 2007 and 2008 to defraud many investors, by embarking on private placements, with promises to list the shares for trading on the Nigerian Stock Exchange, when in reality they had no such intention.
Ms Uduk recalled several efforts and appeals to such issuers, to list their shares without success, stressing that “market operators encouraged private placements knowing that the law did not allow the SEC to regulate private companies.”
“Insider trading is what we have to prove. A lot of us are in the market and we have whistle blowing mechanism. It is the operators who will be in a better position to know and report such infractions. For those that have been reported to us, we have been carrying out investigations and once we have evidence, we will invite them and also refer them to the relevant authorities
“With the whistle blowing provision, we have always asked operators in the market to come to our aid if they find any unwholesome activity going on. It is our market and so we all have to do our bit. The market should not be left to us alone; you need to provide information for us to take the necessary actions.
“Anyone that is caught engaging in any activity that is against the laid down rules, be rest assured that such an operator will be made to face the full wrath of the law,” she declared.
She urged operators to cooperate with the commission for the good of the market and the economy, realizing that “it is our market, please let us join hands and revive this market.
“Let us come together and sanitise this market,” she stressed, urging them to bring incidences of market abuse to the attention to the commission and enjoy protection under the law.
Ms Uduk said SEC has been doing its best to ensure that offenders are not left off the hook, hence the Commission is collaborating with EFCC and office of attorney general to be able to do much.
The DG has assured investors that the commission was committed to ensuring that suspicious transactions are not allowed in the capital market.
“We are committed to protecting investors in the work we do. We will keep working on our rules and the possibility of amending them when the need arises, we want more transparency in the market so that investors will feel comfortable and the market can be better,” she added.
The Acting DG said the commission also has the complaints management framework that enables investors to know where to complain to and how long it takes for such complaints to be resolved and for those of the investors that are averse to risks, they are advised to get their financial advisers to tell them where to invest.
“In doing all these, we advise retail investors to invest in Collective Investment Schemes and Mutual Funds because those are managed independently by professionals and they are diversified thereby reducing risks. We also implore investors to take ownership of their investments. They have to be able to monitor their investments, attend annual general meetings as well as read the annual reports sent out to them.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.
The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).
The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.
The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.
Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.
However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.
Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.
Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.
Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.
The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.
Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.
The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.
The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.
At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.
On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.
The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.
The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.
Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.
Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.
Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.
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