AT the close of business on Wednesday September 30th, 3015, some stockbrokers and other capital market operators lost their licence to operate in the market.
This was due to their inability to comply with the new minimum capital market requirement stipulated by the Securities and Exchange Commission (SEC).
But who are these unlucky stockbrokers? Only the top management of SEC can answer this question. On Tuesday September 29th, the Commission published the list of capital market operators who had complied. And on Thursday October 1st, advised investors to check the list to ascertain whether their preferred capital market operator is among those that met the requirements.
By so doing, the Commission is transferring the responsibility of discovering non-compliant operators to individual investors. This, however, is tantamount to regulatory irresponsibility.
As the apex regulator in the capital market, it is the responsibility of SEC to inform the public about companies operating legally and illegally. In recent times, the Commission has stepped up efforts to inform the public about companies operating without licence. In addition, the Commission also informs the public whenever it suspends any company and its directors. It also informs the public whenever such suspension is lifted.
Thus, the expectation is that, SEC would not just publish the list of capital market operators that met the minimum capital requirement; it would also publish the list of those who did not make it.
When the Commission advised investors to visit its website to confirm whether their stockbroker is among the compliant ones, it was indeed admitting the fact that these non-compliant operators may want to continue in business illegally. But by not publishing their names, the Commission is erroneously aiding such illegality. By not publishing their names, SEC is erroneously protecting and hiding their identity, as de-licensed and illegal operators. While this may not be the intention of not publishing the names of non-compliant operators, the fact, however, is by not doing so; SEC is giving them regulatory cover, to operate illegally.
This error is, however, based on another error- the belief or assumption that investors in the capital market have internet connectivity or are internet savvy to know and visit the website of SEC.
Capital market investors
This is an overestimation of the capital market investors in Nigeria. The reality is that many investors are not informed to know about the existence of SEC, not talk of its website. Also, even out of the investors that are aware of the existence of SEC, many of them do not have internet access, and many are also not internet savvy. Another reality is that many retail investors are not even aware of the recapitalisation exercise.
Unfortunately, SEC believes that once it has published anything on its website, it would be accessed by everybody. If the Commission wants to live up to its responsibility of informing the public about the status of operators in the market, it should publish the list of non-compliant operators, not just on its website, but also in the mass media. In fact, it should embark on massive publicity campaign to call the attention of the public to the status of all the companies operating in the market. (Please send comments, complaints and suggestions to firstname.lastname@example.org)