The Council of the Nigerian Stock Exchange (NSE) has kicked out three stockbrokers and an accountant for fraudulent sale of client’s shares.

They are Mr. Taju Folaji, Mr. Ichie Mike Ejezie and Mr. Segun Adebayo Adams. The accountant is Mr. Olorunfemi Ayorinde. He could be reported to the Institute of Chartered Accountants of Nigeria (ICAN) for further disciplinary action, according to a source.

This brings the number of stockbrokers expelled so far this year to seven.

A document obtained by The Nation at the weekend indicated that the Disciplinary Committee of the NSE, indicted the affected for shares fraud.

The stockbrokers, who were members and authorised dealers on the Exchange, were stripped of their registration and authority to trade on the NSE for selling shares belonging to their clients without the mandate and consent of the clients.

Also, the accountant, who was in a stockbroking firm, was blacklisted from carrying out capital market activities with dealing member firms of the Exchange for engaging in “unauthorised transfer and sales of clients’ shares”.

The stockbrokers would also be subjected to further disciplinary procedures by the Chartered Institute of Stockbrokers (CIS) and the Securities and Exchange Commission (SEC), two institutions that also share jurisdictions on ethics, discipline and compliance at the capital market.

The NSE had earlier this year expelled three stockbrokers – Mr Ayokunle Oyedeji, Mr Abioye Eluwole and Mr Gregory Otsu for a similar offence.

“Dealing members are strongly advised not to engage in any activity with the above listed individuals,” the NSE stated in a circular on the expulsion.

With the expulsion, the indicted stockbrokers and accountant will also not be able to work in any stockbroking and investment firms in Nigeria, according to Rule Six, subsection 12 of the NSE Rules.

Under the rule known as “Specific Actions Requiring Prior Consent of The Exchange”, a dealing member shall not be allowed to employ some categories of persons without the prior written consent of the NSE.
These include directors, authorised clerks or other persons including principal officers, such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the NSE or Securities and Exchange Commission (SEC).

Others include any person who was an officer or employee of a dealing member expelled from the Exchange, any person expelled, as an authorised clerk or its equivalent, from any other Exchange, any person refused admission as a member of the Chartered Institute of Stockbrokers (CIS), or any person expelled from its membership, any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty.

The Exchange had recently started the implementation of newly amended rules aimed at tightening the noose on unauthorised sale and transfer of shares by unscrupulous stockbroking firms and traders.
Under the amended rules, it could withdraw the dealing licence of any erring stockbroking firm and trader as well as impose fines not less than N1 million on any offender.

According to the rule, no dealing member shall sell or transfer any securities without the authorisation of the owner.

“A dealing member that has sold or transferred any securities without the authorisation of the owner shall not be permitted to keep any benefits accruing from such transaction, including but not limited to bonuses, rights, commissions, cash dividends, capital appreciation, and any profit accruing therefrom whatsoever,” the rule stated.

Any dealing member that sells or transfers securities without the authorisation of the owner shall be required to buy back the securities along with any accrued benefits within a period of 14 business days.

Besides, where the unauthorised sale transaction is worth N5 million and below in value, the erring stockbroking firm will be liable to pay a fine of N1 million or three times the value of the sale or transfer, whichever is higher, and N5,000 for every day from the day on which the dealing member is required to buy back the securities by the Exchange until the day the dealing member completes buying back the shares for the owner.

Also, NSE has also started implementing its “naming and shaming” rule, which empowers the Exchange to notify the public of suspensions and expulsions of any stockbroking firm.

According to the rule, it shall have power to publish in the local newspapers or circulars to dealing members and other members of the Exchange, the name of any member expelled or suspended by the Exchange, or any authorized clerk whose registration has been revoked by the Exchange, and also to publish such expulsion, suspension or revocation in any other way it may deem fit.

Source:The Nation


Chris Kehinde Nwandu is the Editor In Chief of CKNNEWS || He is a Law graduate and an Alumnus of Lagos State University, Lead City University Ibadan and Nigerian Institute Of Journalism || With over 2 decades practice in Journalism, PR and Advertising, he is a member of several Professional bodies within and outside Nigeria || Member: Institute Of Chartered Arbitrators ( UK ) || Member : Institute of Chartered Mediators And Conciliation || Member : Nigerian Institute Of Public Relations || Member : Advertising Practitioners Council of Nigeria || Fellow : Institute of Personality Development And Customer Relationship Management || Member and Chairman Board Of Trustees: Guild Of Professional Bloggers of Nigeria

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