SEC drags Okumagba, BGL, others to panel over N16b investors’ funds

In from Success Alantee…

The Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator, has dragged the suspended group managing director of BGL Plc, Mr Albert Okumagba, other officials of the group and companies under the group before the Commission’s Administrative Proceedings Committee (APC).
The APC is the adjudicatory arm of the apex regulator. Unresolved cases can only be referred to the Investments and Securities Tribunal (IST), which has similar powers as a high court.
A circular dated June 25, 2015 and obtained now by Ripples.com.ng indicated that the apex capital market regulator has directed Okumagba and all other SEC-registered officials of the BGL Group as well as the three companies under the group to appear before the APC on August 4 and 5, 2015.
The companies involved are BGL Securities Limited, BGL Capital Limited and BGL Asset Management Limited.
Okumagba and others are expected to respond to several allegations of capital market infractions, including earlier investigations by SEC that indicated the group owed investors about N5.8 billion and had accumulated N11 billion in unpaid matured funds to investors.
SEC insisted that Okumagba, other officials and the BGL Group’s companies “remain suspended from all capital market activities”, in addition to the pending hearing at the APC.
“The Securities and Exchange Commission (SEC) received over 40 letters of investor complaints against BGL Group Plc alleging indebtedness to the tune of about N5.8 billion. Investigations were conducted and all-parties meetings were arranged by SEC during which repayment agreements were struck between BGL and some of the affected investors. Unfortunately, BGL continued reneging on promises to restitute investors,” SEC stated in a background report on the suspension and appearance at the APC.
The Commission noted that it had obtained a court order from the Investments and Securities Tribunal (IST) and set up a seven-man Interim Management Team (IMT) for BGL Group as a necessary, well-considered action with the sole objective of protecting investors while a more detailed forensic audit was conducted to determine the financial health of the companies within the BGL Group and the nature and extent of infractions committed by the BGL management.
According to the circular, from the preliminary report of the forensic auditors, it was revealed, among other facts, that indeed BGL Group was in a critical financial state in which the group’s management had progressively eroded its shareholders’ funds through losses sustained over a five-year period totaling about N48 billion as at December 31, 2014.
Also, the investigations uncovered that billions of naira in investors’ funds were put at extreme risk through questionable investments by the BGL management in some illiquid, unlisted companies’ securities; one of which has been declared bankrupt.
It was also discovered that the BGL Group has significant liquidity challenges making it unable to meet its responsibilities towards clients and investors as evidenced by over N11 billion in unpaid matured funds to investors.
SEC noted that while the Interim Management Team (IMT) and the forensic auditors were conducting formal investigations, BGL obtained a Federal High Court order asking the IMT to vacate BGL premises. In obedience of the court order, SEC complied with the ruling despite an existing order from the IST.
In addition, BGL got another Federal High Court order mandating SEC to reverse the suspension. This ruling was given without putting the other parties on notice (exparte).
SEC pointed out that since the exparte order has since lapsed, given the provision of the Federal High Court rules regarding all interim injunctions obtained exparte, the suspension of Okumagba, other officials and the BGL’ companies remain in force and they will be further investigated at the APC.
BGL Plc is quoted on the NASD Plc, the over-the-counter (OTC) market for the trading of shares and securities of unlisted public limited liability companies. Founded in 1993 and formerly known as Banc Garanti Limited, BGL Plc commenced business as a bank holding company with the aim of acquiring distressed or underperforming institutions in the banking sector.
It quickly built up a large portfolio of assets and earned reputation as one of the most influential investment banking firms in Nigeria. BGL Securities is the stockbroking arm of the group and it is a major dealing member of the Nigerian Stock Exchange. It is ranked variously as one of the top 20 stockbroking firms at the stock market. BGL Asset Management, a wholly owned subsidiary of BGL Plc, was incorporated in April 2007 and it deals primarily as the asset management arm of the group. BGL Capital, another wholly owned subsidiary, has been a major player in the wholesale finance and mergers and acquisition industry.
The Investment and Securities Act (ISA), which enshrines investor’s protection as the core mandate of SEC, gives it wide-ranging powers to protect investors from any form of abuse. SEC is statutorily empowered to “ intervene in the management and control of capital market operators which it considers has failed, is failing or in crisis including entering into the premises and doing whatsoever the Commission deems necessary for the protection of investors” while it can also “in furtherance of its role of protecting the integrity of the securities market, seek judicial order to freeze the assets (including bank accounts) of any person whose assets were derived from the violation of this Act, or any securities law or regulation in Nigeria or other jurisdictions”.

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