"Your funds are only locked, not lost" - SEC to customers of collapsed Fund management companies

By Richard Abayeta Abugre
LISTEN APR 7, 2021

The Security and Exchange Commission(SEC) says it has embarked on major reforms to ensure a safe, secure and sound financial sector in the country.

The Deputy Director-General of the Securities and Exchange Commission, Paul Ababio said at the TESAH CAPITAL Investment Dialogue organized under the theme "Investing after the financial sector clean-up".

Some of the reforms implemented between 2017 and 2020, according to Mr Ababio, include commencing an investigation into troubled fund management companies that led to the revocation of the licenses of those companies that were not up to the task.

He stated, "a directive was issued to fund managers to halt guaranteeing of returns, this "was because it gives the impression that the fund manager has a balance sheet to support the risk that they take. So irrespective of what happens on the line portfolio, the fund manager will make you hold".

Mr Ababio assured Ghanaians whose monies were invested in the collapsed fund management companies that their funds are not lost but only locked up with plans far advanced to retrieve their monies for them.

According to him, SEC has also reviewed and enhanced the licensing requirements which brought about the new capital requirements.

He added that an amendment has been made to some aspects of Act 928 (section 35, 37 and 209) that has allowed the commission to become a signatory to the International Organisation of Securities Commission.

Another reform according to him, is to increase the public profile of the Commission through transparency and visibility.

Based on the new guidelines issued by the Commission, market operators are required to issue annual reports. This will help increase transparency between market operators and investors.

SEC has developed a master plan policy document titled; SEC strategy and the capital market master plan which touches on four main key issues including; Creating diversity of investment a product and enhancing liquidity in the securities market, Increasing the investor base through investor education and engagement with the public, Strengthening infrastructure and improving market services, and Improving regulation, enforcement and market confidence.

He revealed that the strategy and master plan has been fashioned to model the national agenda. "For example, one of the key initiatives of SEC is to adopt and use technology to enhance business efficiency and so we have also taken the forefront of technology."

"Ghana is one of the first markets in the world to digitise trading. So if you think of our stock market...last year we actually had the highest trading volumes on record in the midst of COVID. Trading volumes exceeded by far what has been seen on our markets", he revealed.

All these reforms seek to boost investor confidence in the capital market, improved and diversified landscape, well informed and educated investing public, and an enhanced commission with adequate institutional capacity to regulate efficiently and strategically.

On his part, Dr Elikplimi Komla Agbloyor, a senior lecturer at the University of Ghana Business School advises Ghanaian to desist from running after ridiculous returns on their investments when investing with fund management companies. He intimated that any returns that are above 20 percent are unrealistic and therefore "you should flee for your life".

Touching on what investors need to do after the financial sector clean-up exercise, he urged investors to check if the company they intend to invest in is licensed, check the qualification of the board members and managers, check the corporate governance structure of the fund managers and do a check on the historical performance of the fund manager.

On what fund managers should do to regain investor confidence, he urged them to rebuild trust, hold their staff to higher levels of accountability and ethical standards, provide necessary information that investors need and increase monitoring.

Kwame Pianim, a celebrated Ghanaian business economist urges SEC and the Bank of Ghana (BoG) to work together to clearly understand who is supposed to regulate which company to prevent any further rot in the financial sector.

He is however worried about regulators running to the media while investigating a company, arguing that, in a situation that the said company or individual is exonerated much harm would have been done to the company/individual.

He wants internal auditors to be instituted internally to audit SEC check its activities.

Tesah Capital Limited (formerly NDK Capital Limited) was incorporated in 2010 under the laws of Ghana to provide fund management services to pension trustees, financial and non-financial institutions, corporates and individuals.

They are licensed by the Securities and Exchange Commission (SEC) as an Investment Advisor and Fund Manager and registered by the National Pensions and Regulatory Authority (NPRA) as a Pension Fund Manager.

Richard  Abayeta Abugre
Richard Abayeta Abugre

News ReporterPage: RichardAbayetaAbugre