SEC vows to crack the whip on recalcitrant fund managers

The capital markets regulator, the Securities and Exchange Commission (SEC), currently has more than 700 complaints from customers of some fund management firms over their inability to access funds after making the due redemption requests.

This was disclosed by the Deputy Director-General responsible for Legal Affairs at the Commission, Deborah Agyemfra, while making submissions on the topic ‘Enhancing Investors’ Confidence: Critical Vehicle to Driving Economic Growth’ at the second edition of the Money Summit organised by the B&FT.

She clarified that the erring companies are not those which had their licences revoked during the sector clean-up, but firms that have met new measures introduced by the SEC – including raising the minimum capital required for fund management firms to GH¢2million from GH¢100,000 as well as introducing Conduct of Business Guidelines which detail required qualifications for directors of the companies.

“At this point we have over 700 complaints from investors who have their money locked up, and this is not from the bailout but from current companies; and that saddens me because it shows some people we give licences to have let us down,” the SEC’s Deputy D-G said.

Mrs. Agyemfra said her outfit will not sit idle for recent gains to be eroded. and promised that the SEC is keenly addressing the matter.

“At the SEC, we will not sit there and have widows come with their children following them, looking for their school fees which are locked up; or someone who has a stroke and is sitting in a taxi and saying ‘I need my money’. I look forward to a time when there will be no redemption complaints. When people put their money in an investment scheme and they go back for it, they will be able to get their money because the people we give the licenses to understand the business and what they are doing,” she said.

She however urged investors to be alive to their basic responsibility of due diligence, saying that while the SEC will bring all its powers to bear in ensuring the sector remains sanitised, the investing public must not abdicate this duty simply because a company is regulated.

The regulator’s representative further stated that investors must seek to understand the products they are purchasing, and not rely solely on the promise of returns or supposed goodwill.

“We will be very happy to see a day when investors are well-informed and asking the fund managers the right questions, and people can recognise Ponzi schemes afar and say: ‘This I know, and I will not go there’. That will bring joy to us at the SEC,” she noted.

Offering an update on locked-up funds in fund management companies that had their licences revoked, she explained that the Commission is still awaiting winding-up orders for four companies including the erstwhile Gold Coast Securities Limited (now Black Shield).

“As we speak, we have four companies that we do not have winding-up orders for; and we have managed to get forty-three. For the latter, we have managed to get records to validate claims and those payment are on course – except for the ones with which we have issues over the court order. However, the court process is ongoing; but as you and I know, nobody can force the hand of the court, and the other party has a right to make their presentations to the courts.”