GHC 50,000 bailout: Clients of failed investment firms to receive cash via GCB Bank

The government has begun the process to pay over 10,000 clients who have locked up funds in failed investment firms via GCB Bank.

The customers are going to be paid cash out of a GHC50,000 partial bailout into accounts for each client at the state-owned bank.

The Securities and Exchange Commission (SEC) released the latest update in a statement which explained that: “clients would therefore be able to withdraw cash as soon as their accounts are activated”.

The SEC, therefore, appealed to all affected clients who opt for the partial bailout package to patiently follow all the processes and rely only on information provided by the regulator on the process.

“Clients who are yet to receive their Claim IDs are advised not to panic as the SMS is being dispatched in batches,” the release added.

The partial cash bailout will cover all clients of the remaining affected Fund Management Companies (FMCs) including customers of Gold Coast Fund Management Limited (now Blackshield Fund Management Company Limited).

In the end, the partial bailout being offered would result in 89% of individuals and 82% of pensioners being fully covered.

SEC said validated claims in excess of the partial cash payout amount should be covered after the liquidation proceedings in court.

The regulator indicated that a large number of affected clients have been sent SMS messages containing the value of their validated claims “with outstanding customers to be covered shortly”.

“Interested claimants must now follow three simple steps (reduced from six steps)” in order “to access the partial bailout in cash”.

Those who have completed step one are expected to be contacted shortly to complete the last two steps to access their payment of conveniently.

“Clients with validated claims in excess of Fifty Thousand Ghana Cedis (GHC 50,000) can also opt to wait for the conclusion of the liquidation processes in court to access the full bailout package,” SEC added.

Background

The SEC, acting in accordance with Section 122 (2) (b) of the Securities Industry Act (SIA), 2016 (Act 929), revoked the licences of 53 FMCs on November 8, last year, as part of a general financial sector clean-up.

Eight of the firms appealed against the revocation decision to the Administrative Hearings Committee (AHC) but only three were successful.

Following the revocation of the licences, the SEC took certain actions to protect investors.

They included notifying the Registrar of Companies/Registrar-General to petition the court for orders to commence the official liquidation of the 53 FMCs under the relevant law, as well as the appointment of an agent to take copies of records and lock up premises to secure the assets of the affected companies.

It also mandated the agent to receive claims from the clients of the affected companies, acknowledge receipt of same and also validate the claims.

The Official Liquidator of the Fund Management Companies, the Registrar-General, started paying off an initial bailout for some of the customers whose claims had been validated.

However, no action could be taken for clients of Blackshield Capital Management Limited, Firstbanc Financial Services Limited, Apex Capital Partners and Ideal Capital Partners Limited.

The firms had filed applications in court to challenge the revocation of their licences by SEC.