SEC moves to protect investors from bogus offers


Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) has introduced a major amendment to disclosures and information to be included in a prospectus for any public offering as part of efforts to further safeguard the investing public from false claims and bogus offerings.

With the new amendment, companies offering equities or debt issues to the general public will have to include SEC’s contact telephone number and email address conspicuously in the introductory part of the prospectus for interested members of the investing public to confirm the veracity of the offer.

According to SEC, the introduction of the confirmation segment was part of efforts to enhance investor protection and promote transparency in the operations of the Nigerian capital market.

SEC noted that issuers should display prominently in the introductory part of the prospectus that “investors may confirm the clearance of the prospectus and registration of the securities” with the Commission through provided email and telephone numbers. The new requirement took effect on June 18, 2020.

“The investing public are encouraged to utilise the contact information provided in a prospectus to contact the Securities and Exchange Commission where they require information regarding the clearance of a prospectus or registration of securities,” SEC stated.

The new requirement came on the heels of enforcement of a new investors’ identification regime also aimed at enhancing transparency in the capital market and forestall the recurring incidence of unclaimed dividend.

The market had on April 1, 2020 started new identification regime under which no transactions shall be effected on any existing investor’s account without updated and validated information as required under the approved know-your-customer (KYC) format for the market. Any stockbroking firm that trades on any such incomplete account shall be sanctioned.

SEC had directed stockbrokers to capture full information in respect of new clients and update information of their existing clients. The required information include bank account details, bank verification number (BVN), telephone number and email address.

“Such information should be validated against the Nigerian Interbank Settlement Systems Limited (NIBSS) BVN validation portal. Brokers should update their Order Management System to enable the system flag off accounts with incomplete KYC information,” SEC stated.

According to the Commission, the clearing house for the stock market, the Central Securities Clearing System (CSCS) should an editable format of lists clients with incomplete records to stockbrokers for them to update and return such to CSCS.

The apex regulator mandated the CSCS to ensure transmission of full information to the registrars following transactions while registrars must ensure that new or updated shareholders information transmitted to them are properly captured in the relevant company’s register of members.

“The relevant capital market operators are hereby advised to note that monitoring and enforcement of strict compliance with the foregoing will commence on April 1, 2020,” SEC stated.

SEC noted that the new enforcement regime was in furtherance of its investor protection and market development mandate with a view to ensuring ensure accountability, transparency and stability in the capital market.

The Commission stated that the new regime is aimed at forestalling, reducing and eventually eliminating the incidence of unclaimed dividend and to ensure that investors receive the benefits accruing to their investments immediately without any stress.

SEC had in November 2015 launched the E-Dividend Mandate Management System (E-DMMS), in collaboration with the Central Bank of Nigeria, Nigerian Interbank Settlement System (NIBSS) and other stakeholders.

The E-DMMS is an E-dividend payment portal that ensures the payment of dividends directly into a shareholder’s account.

The Commission subsequently cancelled the issuance of physical dividend warrants, opting for full e-dividend payment for companies quoted on the  stock market.


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