The Security And Exchange Commission’s Ongoing Validation Exercise Is Not Hope Assuring

Daniel Ogbarmey Tetteh Director-General of SEC

The Securities and Exchange Commission (SEC) of Ghana is a public entity established by law (Act 929 of 2016) as an amendment to the Securities Industry Law, PNDC Law 333 of 1993.

The object or legal purpose of the SEC’s existence is to regulate and promote the growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected.

It means that SEC ultimately exists to protect investors in the security market and ensure that the market operates fairly, efficiently and transparently to ensure that the market’s integrity is not lost. It is in consonance with this legal mandate that the SEC is bound to perform numerous functions to ensure that there is investor confidence in the securities market. Notable among these functions is that the SEC shall maintain surveillance over activities in securities to ensure orderly, fair and equitable dealings in securities. But this is somewhat becoming a mirage.

Apart from its parent law (Act 929 of 2016), SEC equally operates under other enactments such as Foreign Exchange Act, 2006 (Act 723), SEC Regulations (L.I. 1728) and Unit Trust and Mutual Fund Regulations (L.I. 1695).

It is obvious from the foregoing that the law has clothed the SEC with significant authority to ensure that sanity prevails in the securities market in Ghana. Sadly, sanity, fairness, orderliness and transparency in the securities market appear to be far -fetched under the watch of the SEC and now, most investors or depositors only see the SEC as a license revocation authority in the securities market. People’s investments go down the drain but the SEC is not biting enough to let sanity prevails in the market.

Recently, SEC again revoked the licenses of 53 fund management institutions in the securities market for stipulated reasons. Pursuant to that, SEC announced a validation exercise and directed that investors affected by the license revocation should go to various branches of the Consolidated Bank Ghana (CBG) to make their locke-up investments known to designated SEC officials at those venues. Per the SEC directives, investors are required to show documentary evidences of the funds invested and with which fund management company.

This SEC ordained validation exercise comes with a lot of unnecessary frustrations for depositors as if investing in the securities market is now a crime in Ghana. The exercise also failed to show that the future is bright for depositors so far as their fund recovery is concerned.

Some depositors travelled long distances to the designated validation venue only to be told the venue was changed. Initially for example, FirstBanc customers in Accra were to go to the CBG Branch at Manet Towers at Airport City and upon reaching that venue, they were re-directed to the CBG branch at Kokomemle. We visited this venue on day two of the validation exercise and noticed that the exercise was meant to be simple but SEC officials made it a big deal and further frustrated the people.

The validation exercise virtually took place in the scorching sun with few canopy tents provided. The validation forms were virtually non-existent hence depositors were given a copy to go and run photocopies of the forms before they complete them (the forms). The validation form is nothing but a one page document which SEC could have availed online in this 21^st century computer age for affected depositors to do an online completion and the printouts submitted with evidence to SEC.

The exercise was meant to be monitored by the Security Services hence Police, Military and Fire Service officers were seen at the venue to apparently maintain law and order. However, these security officers rather took cynical advantage of the process because most of them were also affected investors. As such, even those that came very late in the day attempted to submit their completed forms before the civilian depositors do so. The vigilant civilians also protested vehemently and momentarily, there was confusion at the venue and the exercise came to a halt. But for the swift intervention of the private security staff of the venue, the validation exercise would not have proceeded.

Above all, the manner in which SEC officials approached the validation exercise made it look like a deception or a theatrical performance of a sort. It took a depositor about 4 hours to submit the completed validation form with its attachments even though it took only about 5 minutes to complete the form.

Initially, only one reception desk was provided for collection of the completed forms. The long waiting time later compelled the addition of another desk. Some SEC officials superintending over the validation exercise were verbally abusive while others exhibited the ability to calm nerves.

The shocking aspect of the exercise was that the SEC officials took no records of submission of the validated forms. They only collected the completed validation forms and placed them in boxes. No investor or depositor was given any documentary evidence of form submission and neither did the SEC officials write the names of people whose completed forms they collected.

Such an important validation exercise was approached manually and casually thereby not assuring depositor hope in the exercise. The danger is that if SEC officials misplace some of the completed validation forms, the depositors would have no evidence to show that they actually submitted the completed validation forms to the SEC officials.

SEC’s approach to the validation exercise leaves more room for eyebrows to be raised regarding the Commission’s resolve to help depositors recover their monies. We hope we do not end up becoming a soothsayers or prophets to be vindicated by our forebodings or should we say our predictions that the SEC validation exercise holds nothing good for the affected investors because the exercise failed to assure hope.

It should not be lost on the SEC and the Ministry of Finance that the private sector has been touted as the engine of economic growth and this is actually true. As such, any attempt to sabotage private investments has negative cascading effects on the macroeconomic indicators.

One therefore hopes that the validation exercise is not a mirage as it appears to be. It is also hoped that the exercise is not a mere public show to indirectly forestall depositor agitations or protestations, and as time grinds, the dust will settle. Mindful of his over two-decade experience in investment banking coupled with his passion for financial literacy, Rev. Daniel Ogbarmey Tetteh, the Director-General of SEC should have approached this validation exercise much better. The lukewarm administrative procedures employed in carrying out the investor validation gave SEC out as not being a serious state institution mandated to regulate the securities market in the country.

~ Akpe ~
Authors

1. Philip Afeti Korto (afetikorto@’yahoo.com )

2. Ms. Adelaide Setordji ([email protected])