Security commission boss warns against infractions

The new Director General of the Securities and Exchange Commission (SEC), Arunma Oteh, has said that for the capital market to grow, every operator must have zero tolerance for “sharp practices.”

Speaking in Lagos on Monday, during a visit to the Nigerian Stock Exchange (NSE) on Monday, Ms. Oteh, said the crisis recorded in the nation’s capital market in the past two years was as a result of the sharp practices of market operators, heightened by weaknesses in governance.

Ms. Oteh, who assumed duty on January 7, said, “In the last two years, we have had challenges that have eroded investors’ confidence, but these things happen for us to learn and to ensure that they do not happen again.”

“I feel that we have weaknesses in our governance, including infrastructure that have led to some of the sharp practices that have made our market decline in the way that it has,” the former vice-president in the African Development Bank said.

“I believe that the challenges that we have had in over the last two years, really, would enable us lay a foundation that will make sure that each and every one of us do not accept improper behaviours. We will not accept it because one bad egg will smear every one of us. We must make sure that this market is considered in terms of issues around transparency, governance, the number one market in the world,” Ms. Oteh added.

Capacity as challenge

The SEC’s boss said the issue of capacity is a challenge facing the market. “As capital market operators we must ensure that we have the instrument and skill to monitor market operations,” Ms. Oteh said.

She advised market operators to look at capacity also at investor’s level. She said, “We at the SEC are meant to enhance the public enlightenment programmes that we have and enhance investors’ education too. Most importantly, we must ensure that investors in our market understand the risk they are taking in whatever it is that we sell to them or advised them.”

Ms. Oteh said, “I am sure everyone will agree with me that we have had sharp practices in our market. We, at the SEC commit that going forward, we would have zero tolerance for any sharp practice, and I hope that each and every one of you commit to the same.”

Boosting confidence

The Director General of the NSE, Ndi Okereke-Onyuike, and an executive member of the Association of Stock-broking Houses of Nigeria, Emeka Madubike, called for market reforms that will boost investors’ confidence.

Ms Okereke-Onyuike, reassures of the market’s readiness to embrace reforms that will “further attract investors back to the market.” While the Chief Executive Officer of Compass Securities Limited, Mr Madubike, said operators are prepared for market reforms.

Self regulation

Ms Oteh said the reform should start by self-regulation, saying, “If each of us must continue to play our role, we need to work together and build this market. We at the SEC are looking to reform ourselves. If we have to earn our role as the regulator of this market, we must reform our self. There are things that we need to do; I believe that there are things that the NSE and every operator need to do.”

Speaking on the capital market report, she said, “I do think that (the report) is a very good road map for the way forward. If we are successful in implementing some of the recommendations by the committee, we will have a kind of market that we will be proud of,” she said.

She added that the SEC has been looking inward for greater market performance. Ms. Oteh said in 2008 the SEC engaged a diagnostic service company to examine its performance. “Some of the (company’s) findings are extremely useful for us to look inward and understand some of the things that we need to do to prepare ourselves for market reform,” she said.