Investors in the Nigerian Capital Market with multiple subscriptions for the same public offer may forfeit their investments according to the Securities and Exchange Commission (SEC).
The Commission noted that the penalty was with a view to ensuring the global sustainability of the Nigerian Capital Market’s integrity and reputation. It observed that one major source of unclaimed dividend remains the use of non-existent identity to make multiple subscriptions to public offers.
SEC had at its last Capital Market Committee (CMC) meeting approved the recommendations of a market wide committee on formulating a uniform position for the treatment of multiple subscriptions to public offers.
The capital market regulators viewed the action of submitting multiple applications for the same Public Offer in every consideration, illegal. It also stressed that the wrongful acts were carried out, by the perpetrators, under false pretence and the Commission should not be seen to reward the wrongful acts/illegality of the perpetrators.
The report which described the perpetrators in two groups noted that the first group (Group A) of investors actually existed but joggled their names in different forms to enable them purchase more than the permitted units of shares on offer. While, the second group (Group B) was the class of investors that did not actually exist but used fictitious names for the purpose of purchasing more than the permitted number of shares during public offers. The report agreed that both groups had fraudulent intentions and their actions were collectively illegal.
In a statement containing the penalties as made available to journalists, the Commission said
“That Group ‘A’ above should be considered for a level of forbearance by giving them a grace period up to 1st September, 2017 within which to come forward and expressly prove their individual identities, subject to highest KYC criteria, to be defined by the SEC. Those owners, whose identities are established, would then be allowed to consolidate their accounts. After the expiration of the timeframe, unclaimed dividends, traceable to this category that have not been identified and consolidated, along with their securities shall be transferred to the Nigerian Capital Market Development Fund to be managed transparently in a separate basket under clear guidelines;
“That since category ‘B’ refers to those securities with non-existent owners, the unclaimed dividends and related securities of this category cannot be ascribed to anyone. Therefore, both the unclaimed dividends and securities shall be transferred to the Nigerian Capital Market Development Fund referred to above;
“That, going forward, anybody who engages in the wrongful act of multiple subscriptions for the same public offer, shall be prosecuted;
“That the Market shall put in place adequate processes, leveraging on technology, towards detecting and identifying such cases of multiple subscriptions in the future.”
The statement urged all investors with cases of multiple subscriptions under Group (A) that are considered for forbearance to approach stockbrokers or registrars to regularise.