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11.11.2019 Business & Finance

Gov't Will Pay Customers Of Defunct Fund Management Companies —SEC

By News Desk
Gov't Will Pay Customers Of Defunct Fund Management Companies —SEC

The Securities and Exchange Commission (SEC) says individuals and corporations who have their funds locked up in any of the 53 defunct Fund Management Companies should expect some funds from the government ahead of official liquidation processes.

Last Friday, SEC revoked the licenses of the 53 companies, citing amongst other things, the failure of the institutions to return the funds of clients.

In an interview on the Citi Breakfast Show, the Deputy Director-General of the Commission, Paul Ababio, said liquidating the assets of the companies is time-consuming, hence government's intervention.

“We have engaged government; they have subscribed to making some funds available. Obviously, we have to finish with the validation first, but we have a sense of the range which we are looking at and they will make the amount available after we have done the validation. The first source of funds will be the government support, the liquidation period takes some time, ideally, because this has to do with businesses, we may get to liquidate some assets a bit earlier than others so from the ones we are able to get as the liquidator works payment will be made”.

“So that is the second and primary source of funding for this exercise. So, we will be working through the Consolidated Bank of Ghana (CBG) branches throughout the country, we will have agents in these branches who will receive the claims. So, people can go to the CBG branches of these agents to file their claims, we will also make phone lines available for people to call, those will be announced today in the course of the day”.

The action was taken pursuant to Section 122 (2) (b) of the Securities Industry Act, 2019 (Act 929) which authorizes SEC to revoke the license of a market operator under some circumstances.

SEC also explained that the revocation is “in accordance with its mandate of protecting investors and the integrity of the capital market.”

SEC and its authorized agents will secure the premises of the affected companies for further investigations under section 26 of the Act.

The Securities and Exchanges Commission in August 2019 increased the minimum capital requirement for Fund Management Companies from GH¢100,000 to GH¢ 2million and has given them a December 2020 deadline to meet the new requirement.

At the time, the Commission indicated that it was investigating 21 fund managers for sinking as much as GH¢5 billion in risky investments such as unlisted bonds, direct private equity stakes and related-party deals that are difficult to liquidate.

It noted that another GH¢4 billion had been tied up in fixed-term investments, which are now starting to trickle in after the government stepped in and bailed out failed banks with GH¢11.2 billion and microlenders with another GH¢925 million.