SEC explains why bailout for troubled Blackshield customers has delayed

Clients of troubled fund management company, Blackshield Capital, have been up in arms against the Securities and Exchange Commission (SEC) for failing to include them in a bailout package for customers of 53 collapsed companies.

But the regulator says the company submitted data on only 3% of its clients, making it difficult for the commission to validate 82, 204 claims filed by investors with the company.

According to the Director-General of SEC, Rev Daniel Ogbamey-Tetteh, the commission had access to data of only 2,275 clients of the company and were blocked from accessing the rest.

“They gave our clients some data in excel. The data enabled our agent to validate only 2,275 claims representing GH₵26 million.

“We were engaging them for the release of information they have on a server and they were just drawing circles around us.

“Eventually, we had to use law enforcement agency to be able to use a server. The server was retrieved not from the offices of Blackshield, but from another office,” the SEC boss said in a Citi FM interview, monitored by theghanareport.com.

On September 1, a demonstration by the Coalition of Aggrieved Customers of the collapsed 53 Fund Management Companies organised at the Finance Ministry ended with three persons being arrested.

They had earlier announced the previous day that they would stage the demonstrations as the SEC excluded Blackshield Capital Limited (formerly Gold Coast) and other investment firms on the basis of an ongoing court action.

The group mostly comprising customers of Black Shield Capital Limited are also fighting suggestions by SEC of inaccessibility to their documents.

But SEC insisted that the managers of Blackshield frustrated its efforts to collate data on their clients.

“There are 40 companies that we have full access to their data and validate completely. Blackshield is not part of the 40.

He, however, said the SEC agent handling the validation of the Black shield data had been asked to expedite action on it while the company is court fighting the revocation with its license.

There are currently four companies in court—Blackshield, Firstbanc, Apex and Ideal.

Rev Ogbamey-Tetteh said Apex and Ideal had submitted their data and the claims of their clients validated.

“For Firstbanc, we didn’t have access because they didn’t cooperate with us right from the onset. They went to court and had an injunction against us taking any further action,” he said.

Meanwhile, the Registrar-General Department says it will soon convene a virtual meeting of creditors of the 22 companies officially under liquidation.

The 22 FMCs under official liquidation include Alpha Capital Securities Limited, Alltime Capital Limited, Axe Capital Limited, Brooks Asset Management Limited, CDH Asset Management Limited (Intermarket) and Fromfrom Capital Limited.

Others are Galaxy Capital Limited, Lifeline Asset Management Limited (Kamaag), Mak Asset Management Limited, Man Capital Limited, Mec-Ellis Investment (Ghana) Limited, Mutual Integrity Limited, Nesst Capital Limited and Nickel Keynesbury Limited.

The rest are Nordea Capital Limited, QFS Securities Limited, Sirius Capital Limited, Standard Securities Limited, Supreme Trust Capital Limited, Tikowrie Capital Limited, Ultimate Trust Limited and Weston Capital Management Limited.

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, in line with the relevant provisions of the SIA.

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

SEC on August 30,  said the government was set to announce a bailout package for clients of the 53 defunct Fund Management Companies (FMCs).

According to SEC, the package will be given in phases with the first phase covering clients of the twenty-two (22) companies currently under official liquidation.

It further noted that the Official Liquidator, the Registrar General, will communicate details of the payment process to affected clients starting in September 2020.

It, however, noted that no action could be taken for clients of Blackshield Capital Management Limited, Firstbanc Financial Services Limited, Apex Capital Partners and Ideal Capital Partners Limited since they have filed applications in court to challenge the revocation of their licences by the Securities and Exchanges Commission.

The release drew anger from the Coalition of Aggrieved Customers of Collapsed 53 Fund Management Companies who demanded inclusion.

They further went ahead with a demonstration at the Ministry of Finance leading to the arrest of the three persons.