Court throws out Menzgold suit against SEC and BoG
Barely 48 hours after the police had declared its Chief Executive Officer, Nana Appiah Mensah, aka NAM 1, and other directors wanted, the gold dealership, Menzgold Ghana Limited, has suffered another setback, this time on the judicial front.
A suit by the company challenging the regulatory powers of the Securities and Exchange Commission (SEC) and the Bank of Ghana (BoG) over its activities has failed to succeed after the Commercial Division of the Accra High Court threw it out.
The court, presided over by Ms Justice Akua Sarpomaa Amoah, dismissed the suit on the basis that Menzgold failed to exhaust all regulatory mechanisms for redress, as stipulated by law before, rushing to court.
The dismissal followed a preliminary legal objection filed by the defendants (the SEC and the BoG).
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Menzgold dragged the SEC and the BoG to court in September 2018, shortly after the SEC had ordered it to shut down operations.
In a notice dated September 7, 2018, the SEC ordered Menzgold to halt its operations because it had no licence to operate its gold vault trading platform that allowed subscribers to earn as much as 10 per cent dividend, known as ‘extra values’, monthly.
Menzgold, in its suit, however, wanted the court to stop the SEC and the BoG from what it described as “unlawful interference’’ in its activities.
It described the two regulators as indulging in activities that were “harmful” to its operations.
It claimed that certain notices issued by the BoG and the SEC in relation to its operations were “arbitrary, capricious and contrary to articles 23 and 296 of the 1992 Constitution’’.
The company wanted, among other reliefs, a declaration from the court that its activities did not fall under the scope of the BoG or the SEC’s regulations.
Other reliefs included “an order of perpetual injunction to restrain the BoG and the SEC from interfering with its business activities or further acts by publishing any derogatory notices’’.
Statement of claim
In its statement of claim attached to its writ, Menzgold averred that the BoG, without providing any proof of illegality, had directed certain banks not to conduct business with the company.
It further described the shutdown of its operations by the SEC as “without any legal basis”.
“The second defendant (SEC) did not describe the business module, which had been ongoing for more than three years, as an illegality per se but one which required licensing,’’ it added.
Menzgold has been on a collision course with the BoG and the SEC over the company’s gold vault trading platform that allowed subscribers to earn what Menzgold describes as “extra values’’ monthly.
The BoG issued two public notices on November 1, 2017 and August 6, 2018, warning the public that Menzgold was not licensed to take deposits and that people who dealt with the company did so at their own risk.
Menzgold, however, denied engaging in deposit-taking and explained that it engaged in gold trading and rather shared the earnings of the trade with subscribers.
On September 13, 2018, the company shut down its operations following the SEC’s directive that its gold vault trading platform contravened the Securities Industry Act, 2016 (Act 929).
Since the shutdown, the company has announced numerous payment schedules to finally settle its investors, but the schedules were either abandoned or altered at the last hour.
Some of the investors, in an effort to retrieve their money, resorted to demonstrations to drum home the need for the government to intervene.