Insider Dealing: NGX warning sparks calls for tougher action

Shareholders’ groups have called for tougher enforcement of corporate governance rules and stiffer penalties for insider trading following warnings to three listed firms by the Nigerian Exchange Ltd.

Moses Igbrude, the President of the Independent Shareholders Association of Nigeria (ISAN), one of the groups, described compliance with corporate governance rules as non-negotiable.
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Igbrude, in an interview with our correspondent on Wednesday in Lagos, emphasised that companies and their officers must strictly adhere to laid-down regulations.

He spoke on the backdrop of the Nigerian Exchange Ltd. (NGX) recently cautioning Sterling Financial Holdings Company Plc, Mutual Benefits Insurance Plc and Austin Laz & Company Plc for engaging in insider dealing activities.

The Exchange said the companies breached provisions of its Listings Rules and were sanctioned accordingly.

Igbrude noted that any regulatory breach should attract appropriate sanctions to serve as a deterrent.

According to him, regulatory enforcement must be firm and transparent, adding that infractions should not be treated as mere formalities.

“When there are breaches, there must be consequences. Sanctions should not just be on paper; they must be implemented to serve as a deterrent to those planning to flout the rules,” he said.

Igbrude noted that while companies could be penalised for violations, it was equally important to hold responsible officers accountable rather than treating the company as an abstract entity.

“A company is run by individuals. When there are governance failures, the individuals responsible should also face sanctions.

“Holding only the company accountable is not enough,” he said.

Igbrude suggested that penalties could include fines, suspension, removal from office or withdrawal of licences, depending on the severity of the infraction.

He said that decisive regulatory action would restore investor confidence and reinforce discipline in the corporate sector, reiterating the association’s commitment to promoting transparency and protecting shareholders’ interests.

Also speaking, the National Coordinator of the Pragmatic Shareholders Association, Bisi Bakare, described the warning as troubling but necessary.

Bakare said it reinforced long-standing concerns about corporate governance and market discipline.

“As a shareholders’ activist, insider trading is a serious breach of trust that unfairly disadvantages minority shareholders, distorts price discovery and damages the credibility of the capital market,” she said.

Bakare commended the NGX for taking action but urged consistent, transparent and firm enforcement to send a clear message that market abuse would attract real consequences.

She called for improved surveillance through the deployment of advanced monitoring technology capable of detecting suspicious trading patterns in real time.

According to her, there should also be stronger collaboration between the NGX and the Securities and Exchange Commission to ensure offenders face not only administrative sanctions but, where necessary, regulatory and legal consequences.

She further advocated stronger disclosure requirements, enhanced board accountability and personal responsibility for directors and management involved in insider trading breaches.

Bakare noted that protecting whistleblowers and encouraging internal reporting channels within companies would help expose unethical practices early.

“Shareholders are the backbone of the capital market, and their interests must be protected at all times.

“Sustained confidence in the market can only be achieved when transparency, accountability and fairness are upheld without compromise,” she said.

Similarly, Boniface Okezie, National Coordinator of the Progressive Shareholders Association of Nigeria (PSAN), said the NGX took the right step by warning the companies involved.

He, however, stressed that if such insider dealing activities are repeated, the NGX should impose stricter sanctions, including monetary penalties on the individuals or directors found guilty, rather than punishing the company as a whole.

In a similar reaction, ISAN National Coordinator, Sunny Nwosu, commended the NGX for taking disciplinary action, describing it as a step in the right direction.

Nwosu emphasised the need for regulators to apply sanctions consistently and firmly to serve as a strong warning to others.

“The sanctions must be taken seriously so that people will respect the rules and avoid engaging in such practices in the future,” he said.

He noted that sustained enforcement would help curb insider dealing and strengthen confidence in the Nigerian capital market.