SEC, NFIU Partner to Curb Insider Dealings, Others

By Dipo Olowookere

The Securities and Exchange Commission (SEC) and the Nigerian Financial Intelligence Unit (NFIU) have agreed to work together in order to reduce the level of fraudulent activities in the nation’s capital market and sanitize it so as to further boost confidence of investors. On Wednesday, both organisations signed a Memorandum of Understanding (MoU) to this effect.

A statement issued by the Head of Public Affairs at SEC, Efe Ebelo, quoted acting Director-General of the agency, Ms Mary Uduk, as saying that the collaboration was to stamp out suspicious transactions at the market, especially insider dealings. She further disclosed that the re-awakening of Ponzi schemes, cybercrime and other fraudulent activities that have engulfed the market in the last few years made this partnership very necessary at this point in time.

The SEC chief noted that some areas where the MoU seeks cooperation of both agencies include training, secondment of middle cadre officers between both organisations, cross border monitoring, repatriation of stolen funds from the capital market and prosecution of offenders, among others.

“If we have solutions that will help us track transactions, it will reduce incidence of insider dealing greatly. We would be very willing to collaborate with you on that in our determination to ensure that our markets are efficient and transparent and all investors are protected,” Ms Uduk said.

Commenting on the rising spate of Ponzi schemes in the country, the financial market expert stressed the need for more collaboration between both organisations and further sensitization to ensure unsuspecting Nigerians do not continue to lose their hard-earned money.

Sharing her view on one of the main reasons the NFIU sought for this collaboration with her agency, which is clamping down on shell companies in the financial system, Ms Uduk said the commission already has regulations that prohibits such firms from operating in the capital market, imploring the NFIU to assist with solutions to track suspicious transactions as they occur.

In his remarks, Director of NFIU, Mr Modibbo Tukur, commended SEC for the relationship that has existed between both organisations and assured that the NFIU would continue to play its part in ensuring that the financial system is safe for Nigerians to operate.

He stated that his agency was making efforts to ensure that the financial system was rid of shell companies adding that for companies to exist, they should have physical addresses.

“If anyone establishes a company, it has to be a company indeed and we have to be firm on this. This has become more important now given the roll out of the ECOWAS single currency, because with that, we know that capital and investments will move across borders and it is a single currency. So we have to step up regulation to avoid fraudulent transactions.

“We will commence by September and some companies would have to be deregistered if they do not meet the criteria. We will publish the parameters and also give them enough time to regularise after which those that do not comply before the deadline will be shut down. If you have an empty company hanging in the system, it is a potential danger and we should not allow it to thrive,” Mr Tukur said.

He stated further that by the time the NFIU commences the due diligence on the shell companies, the information will be shared with the SEC for their further action and commended the SEC on its regulation that does not presently allow shell companies to operate in the capital market.

“Analysis would now be digital so the organisation would be able to share information on transactions as fast as possible adding that the capital market being a very sensitive one, care has to be taken on information dissemination to avoid disruptions,” he added.

Shell companies exist only on paper, without an office and no employees, but may have bank accounts or may hold passive investments or be the registered owners of assets. They may serve as vehicles for business transactions without having any significant assets or operations and are. sometimes used for illicit financial flows, tax evasion and avoidance and money laundering.