The Nigerian Exchange Group (NGX Group), through its regulatory subsidiary NGX Regulation Limited (NGX Regco), has slammed 3,792 regulatory actions on erring trading license holders in 13 years.
The period covers 2011 to 2023, during which these infractions were reported, including 193 rules breaches by stockbroking firms, according to data captured by the BrokerTraX, a trading license holders’ compliance report.
In a bid to improve investor confidence in the market, the NGX commenced a strong campaign against market infractions by its trading license holders by introducing the BrokerTraX.
A detailed look at the report shows that in 2011, the NGX Regco carried out 257 enforcement actions against stock broking firms. This number rose to 436 in 2012 and fell slightly to 424 in 2013.
Further details show that Regco recorded 557 enforcement actions in 2014, which rose to 608 in 2015 but fell to 328 in 2016.
Numbers for other years were as follows: 2017 (267), 2018 (171), 2019 (167), 2020 (82), 2021 (148), and 2022 (139). In 2023 the NGX Regco recorded 208 enforcement actions against trading license holders, bringing the total to 3,792 sanctions.
“The reduction in the number of enforcement actions carried out in 2020 was due to the regulatory concessions granted to Trading License Holder Firms in order to cushion the adverse effect of COVID-19 on their business operations,” the NGX said.
Between January 2012 and November 25, 2024, no fewer than 37 stockbroking firms (names withheld) were involved in unauthorised sale of investors’ shares and misappropriation of investors’ funds, the report further shows.
Most of the complaints about unauthorised sale of investors’ shares and misappropriation of investors’ funds have either been resolved, unresolved or restituted through the Investors’ Protection Fund.
“With the BrokerTraX, investors can now make more informed decisions about where to invest by viewing names of Trading License Holder Firms that have been found liable for contravening market rules,” the report says.
“The goal is to reduce contravention of market rules to its barest minimum in line with the deliberate and sustained effort to restore confidence. With NGX’s zero-tolerance policy on regulatory infractions, there has been an increase in compliance by Trading License Holders.”
Since 2012, no fewer than 64 dealing clerks and other approved persons (names withheld), including staff of trading license holders, have been blacklisted. In June 2024 alone, six dealing clerks and other approved persons (names also withheld) were blacklisted.
One of them was blacklisted by NGX Regulation for her involvement in unauthorised transfer and sales of clients’ shares. She was referred to her respective professional bodies for further action.
Another was blacklisted by NGX Regulation for his involvement in unauthorised transfer and sales of clients’ shares and referred to his respective professional bodies for further action.
One clerk was blacklisted by NGX Regulation for his involvement in unauthorised transfer and sales of clients’ shares. He was referred to his professional bodies and associations (Chartered Institute of Stockbrokers, etc.) for further disciplinary action.
“Blacklisting means a situation where The Exchange puts the name of a Trading License Holder on a list of persons who are denied privileges, services, access, recognition or are boycotted or punished,” the NGX says in the report.
Also, within the same review period, 15 firms and 40 individuals (names also withheld) that were alleged of misconduct were referred to the Economic and Financial Crimes Commission (EFCC). Some are in court, and others are under investigation. Some have had their clients’ funds restored and cases closed.
While most of them were alleged to have been engaged in unauthorised sales of clients’ shares, others were alleged to have misappropriated investors’ portfolio, as well as engaged in diversion of investors’ funds and involvement in guaranteed investment schemes not registered by SEC.
Between January 2013 and January 2018, the NGX disciplinary committee took actions against 11 trading license holders and 17 brokers because of their involvement in market infractions. These allegations ranged from suspected price movement on companies’ shares to unauthorised sales of clients shares and share price/market manipulations, among others.
A further look at the NGX BrokerTraX shows an average compliance rate by stockbrokers (rendition of regulatory returns). It stood at 55 percent in 2011, 75 percent in 2012, and 94 percent in 2013.
The number stood at 76 percent in 2014, and 96 percent in 2015. Others were: 2016 (76 percent), 2017 (79 percent), 2018 (85 percent), 2019 (86 percent), 2020 (85 percent), 2021 (89 percent), and 2022 (90 percent).
