53 Fund management companies: SEC takes action to disqualify directors

BY: Emelia Ennin Abbey
Rev. Daniel Ogbarmey Tetteh (inset), Director-General of SEC, addressing the participants
Rev. Daniel Ogbarmey Tetteh (inset), Director-General of SEC, addressing the participants

The Securities and Exchange Commission (SEC) has initiated processes to disqualify some directors of the 53 fund management companies (FMCs) whose licences were revoked.

About 186 directors of those FMCs are affected, following the revocation of the licences of the companies, and a disqualification will bar them from holding themselves as directors in any companies in the securities industry.

The revocation of the licences of the companies followed their failure to return client funds, which remain locked up, and in a number of cases even folded up their operations.

Two-day training

The Director-General of SEC, Rev. Daniel Ogbarmey-Tetteh, made this known at the opening of a two-day training programme for 40 High Court and Court of Appeal judges in Accra yesterday.

The programme, dubbed: “Time with SEC-Judicial edition”, and on the theme: “The SEC in the capital market”, was organised by the SEC, in collaboration with the Judicial Training Institute.

It will discuss the Securities Industry Act, 2016 (929), and participants will also be taken through the regulatory toolkit for enforcement and recent regulatory development after revocation of licences, Ponzi schemes, the mandate of the SEC and an overview of the securities industry.

The training is part of a series of engagements with stakeholders of the SEC, including the law enforcement agencies, the investing public, among others.

Mandate

Rev. Ogbarmey-Tetteh said the SEC was taking the action in accordance with its mandate of protecting investors and the integrity of the capital market.

He said the commission had embarked on an enforcement drive, “and there is no turning back”.

On the enforcement actions taken so far, he mentioned the revocation of the licences of the failed FMCs in 2019, the referral of cases to the Attorney-General’s (A-G’s) Department for prosecution, directing clients who had lodged complaints with SEC to seek redress in court, referring cases to the Economic and Organised Crime Office and the Criminal Investigations Department of the Ghana Police Service.

Rev. Ogbarmey-Tetteh explained that enforcement was one of the tools the commission used to protect investors and the integrity of the market.

“Enforcement is critical in the wake of challenges, including financial and accounting fraud, dishonesty and misappropriation of clients’ money, Ponzi/Pyramid schemes that have become the order of the day and cybercrime in line with e-transaction,” he said.

He said a number of the enforcement actions would end before the courts, hence the need for judges to be sensitised to the laws regulating the industry and the operations of the SEC.

He was of the view that strong enforcement actions would give confidence to asset owners and the investing public.

“The SEC is determined and committed to executing its mandate to protect investors and the integrity of the market. We have resolved that we will not flinch on taking up enforcement actions,” said Rev. Ogbarmey-Tetteh.

Failure

Giving further explanation on the process to disqualify the directors of the failed FMCs, the Deputy Director-General of the Legal Unit of the SEC, Ms. Deborah Agyemfrah, said following the revocation, the commission put together a list of all directors of the affected companies.

She said currently all the directors were undergoing a face-to-face hearing “for them to tell their side of the story before a decision is taken”.

She said the SEC found out that some of the directors had resigned without notifying the regulator, while some of them had their names on record but never took part in any decision-making activities of the companies.

Appeal

The acting Director of the Judicial Training Institute, Justice Dennis Adjei, said the Securities Industry Act had been in force since 2016, but the training by the SEC would serve as the first time judges were being sensitised to it.

The training would help the judges to appreciate the law better, as they interpreted the law and took decisions to make it beneficial and reflect the purpose for which it was enacted.