Recapitalisation: ASHON Warns Banks Against Unfair Practices in Capital Mobilization

Samuel Mobolaji

The Association of Securities Dealing Houses of Nigeria (ASHON) said, some banks have devised means of bypassing stockbrokers as receiving agents, in a desperate move to mobilise funds to comply with the new capital requirement as directed by the Central Bank of Nigeria (CBN), urging them to desist from such practice.

The association, in a statement issued by its chairman, Mr Sam Onukwue and executive secretary, Mr. Athan Ogbozor stated that, “these banks have handed over their Shareholders Registers to their staff, including drivers and receptionists to issue and receive Share subscriptions forms to investors thereby bypassing stockbroking firms who are the registered Receiving Agents.

“Such completed Offer Forms are then passed directly to the bank, its branches and subsidiaries (including Registrars). In addition, they have opened unapproved dedicated portals as a marketing strategy to investors’ information and constrain Investors to domicile their accounts with their subsidiaries instead of their Stockbrokers.”

It added that, “by these devices, opportunities for fair marketing has been denied stockbrokers. This act is at variance with the acceptable procedure where stockbrokers have the primary duty to market shares and offer investment advice to investors.

“The ongoing unorthodox channels of share subscription deny innocent investors of opportunity of making appropriate investment decisions in line with their investment objectives, risk tolerance, time horizon, and source of fund amongst others. We also fear the likelihood of abuse of the process, as in the 2005 bank recapitalisation where stockbrokers were wrongly blamed for infractions committed by banks.”

ASHON advised issuers and investors to deal directly with Trading Licence Holders who are members of ASHON in order to be availed sound professional advice ahead of any share subscription, saying the firms are duly registered and regulated by the SEC and licensed by recognised securities market platforms.

“The list of recognised Trading License Holders or dealing -member firms is available on the website of Securities and Exchange Commission, Nigerian Exchange Limited (NGX); and ASHON,” it noted.