THE Nigerian Stock Exchange (NSE) has paid compensation to 49 investors that suffered pecuniary losses, in furtherance of the market’s commitment to investors’ protection.
Its Chief Executive Officer, Mr. Oscar Onyema, who briefed stakeholders on the activities of the market in 2020 at a virtual session yesterday in Lagos, said the money was paid to investors who filed in claims for pecuniary losses.
According to him, a total of N17.02 million was paid to 49 investors who suffered pecuniary losses in 2020 while the Exchange also facilitated restitutions and recoveries of shares worth N305.11 million for investors in the year under review.
The NSE had in 2012 inaugurated its Investors’ Protection Fund (IPF), in line with the provisions of the Investment and Securities Act (ISA). Part XIV of the ISA requires the Exchange to establish and maintain an investor protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm during its business as a capital market operator.
In 2019, the NSE recovered about N1.44 billion worth of shares for investors under its investor protection mandate, including restitution of investors who were unjustly dispossessed of their shares.
Onyema had said the recoveries and restitution were in line with the strategic focus of the NSE on investor protection adding that the Exchange would continue to empower and protect investors through education, adequate surveillance, and stringent enforcement of rules and regulations.
The NSE operates many channels for dispute adjudication and resolution, including its complaint management framework, disciplinary committee, subsisting working relationship with law enforcement agencies, especially the Economic and Financial Crimes Commission (EFCC), and a stand-alone IPF.
In December 2018, the NSE strengthened the governance of its IPF with a new framework that outlines a broad-based board and competencies. It had in 2012 inaugurated its IPF, in line with the provisions of the Investment and Securities Act (ISA).
A new governance and management framework approved by the Securities and Exchange Commission (SEC) on December 5, 2018 for the NSE IPF indicated that the fund would now be managed by a nine-member board, drawn from major stakeholders in the capital market.
According to the framework, the board shall consist of a maximum of nine members including a representative each from dealing member firms, NSE, Central Securities Clearing System Plc, SEC, Institute of Capital Market Registrars, one person representing institutional investors, one person with proven integrity and knowledgeable in the capital market matters, one person representing registered shareholders association and one person who shall be a legal practitioner knowledgeable in capital market matters.
Under the new rules, members of the board shall be appointed by the Exchange, subject to the approval of SEC, for an initial term of four years, renewable for a further term of four years only.
The board is the most important organ of the IPF. It is responsible for the management of the IPF and shall hold, manage and apply the fund in accordance with the provisions of the IPF rules and the ISA.
For the purpose of managing the fund, the board is empowered to engage such number of staff as it may deem necessary for the efficient performance of its functions, set up sub-committees to assist in the discharge of its functions, in particular for the purpose of determining the eligibility of an investor to receive compensation and the amount payable; and appoint a management sub-committee.
The board may also by resolution delegate to any sub-committee appointed by it all or any of its powers. Any power, authority or discretion so delegated by the board shall be exercised by members forming a majority of the sub-committee as if that power, authority or discretion had been conferred on a majority of the members of the sub-committee.
The board may at any time remove any member of a sub-committee appointed by it and may fill any vacancy in the sub-committee howsoever arising while a decision of the sub-committee of the board shall be of no effect until it is confirmed or ratified by the board.