The Securities and Exchange Commission (SEC) has revoked the licenses of 53 Fund Management Companies.
SEC, in a statement explained that the revocation follows the companies’ failure to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”
“Essentially, they have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions, despite opportunities provided to them by the SEC within a reasonable period of time to resolve all regulatory breaches. The SEC has concluded after extensive engagement with these institutions that their continuous existence in the light of their conduct poses severe risks to the stability of the capital market and to the interests of investors,” the statement further explained.
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.
“In addition, the SEC has notified the Registrar of Companies of the revocation of these licenses and has requested that the Registrar petitions the High Court to commence winding-up proceedings against these companies under the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180),” the statement added.
The latest set of license revocations by the SEC follows similar actions by the Bank of Ghana against a number of banks, microfinance companies and Savings and Loans companies over the last two years.
The financial sector clean-up, commenced by the Akufo-Addo administration in August 2017, has led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.
The Securities and Exchange Commission (SEC) has, with effect from today revoked the licences of Fifty-Three (53) Fund Management Companies (see Annex A for list of Companies). These actions were taken pursuant to Section 122 (2) (b) of the Securities Industry Act, 2016 (Act 929 or “the Act”) which authorises the Securities and Exchange Commission to revoke the licence of a market operator under any of the following circumstances
(a) If it is wound up;
(b) It ceases to carry on the business for which it was licensed;
(c) If the Commission has reason to believe that the licensed body or any of its directors or employees has not performed its functions or the functions of directors efficiently, honestly and fairly;
(d) If the licensed body contravenes or fails to comply with a condition or restriction applicable in respect of the license or any other provision of Act 929; and
(e) If the licensed person fails to commence business within 6 months of being granted a licence.
The revocation of the licences of the specified companies has become necessary as they have largely failed to return client funds which remain locked up and in a number of cases, they have even folded up their operations. Essentially, they have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions, despite opportunities provided to them by the SEC within a reasonable period of time to resolve all regulatory breaches. The SEC has concluded after extensive engagement with these institutions that their continuous existence in the light of their conduct poses severe risks to the stability of the capital market and to the interests of investors.
The SEC has taken this action in accordance with its mandate of protecting investors and the integrity of the capital market. The SEC and its authorised agents will secure the premises of the affected companies for further investigations under section 26 of the Act. In addition, the SEC has notified the Registrar of Companies of the revocation of these licenses and has requested that the Registrar petitions the High Court to commence winding-up proceedings against these companies under the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180).
The authorized agent of SEC (and the Liquidator once appointed) will work together with the Government to pay a capped amount to all affected investors of these firms in line with Government commitment to support the securities industry and to provide some immediate relief to investors who are hurting because of their locked-up funds. The outcome of the court process will inform the handling of assets retrieval and liquidation to further sort out validated investor claims.
By the close of business on Monday the 11th of November 2019, SEC, together with its authorized agent, will provide further details about the validation process and specific locations where investors can present their claims to be validated. In the interim we urge all investors to remain calm, gather all receipts, statements and any other documentation related to their investment with the affected institutions. There is also no need for any panic withdrawals on the firms whose licences are intact and not on the revocation list. A list of firms whose licences have not been revoked can be found on the SEC website (www.sec.gov.gh)
Below is the list of the affected companies
- All-Time Capital Partners Limited
- Alpha Cap Securities Limited
- Axe Capital Advisors Limited
- Apex Capital Partners Revoked
- Beige Capital Limited Revoked
- Brooks Asset Management Limited
- Cambridge Capital Advisors Limited
- Canal Capital Limited Revoked
- Corporate Hills Investment Ltd.
- Dowjays Investment Limited
- EM Capital Limited Revoked
- Energy Investments Limited
- Fromfrom Capital Limited
- Frontline Capital Advisors Limited
- FirstBanc Financial Services Limited
- Galaxy Capital Limited
- Gold Coast Fund Management Limited
- Gold Rock Capital Management Limited
- Goldstreet Fund Management Limited
- Global Investments Bankers Limited
- Heritage Securities Limited
- Ideal Capital Partners Limited
- Integrity Fund Management Limited
- Intermarket Asset Management Ltd
- Kripa Capital Ltd.
- Kron Capital Limited
- Legacy Financial Services
- Liberty Asset Management Limited
- Kamag Kapital Limited
- Mak Asset Management Limited
- Man Capital Partners Limited
- Mec-Ellis Investment(Ghana) Limited
- McOttley Capital Limited
- Monarch Capital Limited
- Mutual Integrity Assets Management Limited
- Nesst Capital Limited
- Nickel Keynesbury Limited
- Nordea Capital Limited
- Omega Capital Limited
- Procap Finance Company Limited
- QFS Securities Limited
- SGL Royal Kapita Limited
- Sirius Capital Limited
- Strategic Hedge Capital Limited
- Standard Securities Limited
- Supreme Trust Capital Limited
- Tikowrie Capital Ltd.
- Unisecurities Limited
- Universal Capital Management
- Ultimate Trust Fund Management Ltd.
- Utrak Capital Management Limited
- Wealth Vision Financial Services Limited
- Weston Capital Limited
Voluntary Cessation
- HFC Capital Partners Limited
- Attai Capital Limited
- Serengeti Capital Limited
- Indigo Investment Management Limited
- Verit Investment Advisory Limited
Financial sector in crisis?
The latest action by the SEC adds to the series of actions taken against other financial institutions by another regulator, the Bank of Ghana.
The Central Bank as part of its major sector clean up saw it revoking the licenses of 347 microfinance institutions, 39 microcredit institutions, nine universal banks and 23 savings and loans companies.
This development is reported to have affected several hundreds of thousands of Ghanaians whose funds of various sums have been locked up with many of the collapsed institutions.
Receivers for the collapsed banking institutions are in the process of validating claims and making attempts to pay customers monies due them.
Processes are also underway to prosecute persons whose actions or inactions resulted in the collapse of the banking institutions.