SEC to sanction mutual funds for financial errors

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Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) will impose appropriate sanctions on collective investment schemes (CIS) for any errors in their audited accounts.

The Commission stated that it shall henceforth discontinue the practice of issuing prior approval or no objection for audited accounts of collective investment schemes, otherwise known as mutual funds.

Consequently, annual accounts of collective investment schemes upon completion of audit and auditor certification, shall be published within three months after the end of the period to which the accounts relate or any other period prescribed by the Commission from time to time.

“Note however that any misstatements, misrepresentations, or otherwise, observed in the audited accounts of a collective investment scheme shall attract appropriate sanctions, including a requirement to restate the accounts in the scheme’s succeeding financial year, on the fund manager, trustee and auditor”, SEC stated.

SEC noted that the changes in the audit approval process was in line with the provisions of section 169(2)&(3) and section 181(1)(f),(g) and (h) of the Investment and Securities Act 2007, and the importance of disseminating timely information to the market.

Meanwhile, SEC has also tightened the registration requirements for new capital market operators as part of efforts to enhance the quality of operators in the capital market.

According to the Commission, managing directors or chief executive officers of capital market operators who present sponsored individuals before the registration committee for interview would be required to provide a detailed brief about their companies, highlighting the contribution of the companies to the development of the Nigerian capital market.

Under the enhanced framework, all registered sponsored individuals seeking to transfer their registration to a proposed capital market operator or a new firm would henceforth be required to undertake a fresh interview as against the current practice where they are granted an exemption.

“Effective from January 2021, the pre-registration examinations for intending capital market operators conducted by the Nigerian Capital Market Institute would include essay questions,” SEC stated.

The Commission noted that the changes were in line with section 38(2) of the Investments and Securities Act 2007 which empowers SEC to prescribe conditions for registration of capital market operators, including the level of knowledge and skill required to operate in the Nigerian capital market.

Source: The Nation

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