Indication emerged that the Securities and Exchange Commission, SEC, is set to compensate about 580 affected investors for fraudulent conversion of their funds by Mega Asset Managers Limited.
The commission had on November 26, 2015 inaugurated the National Investor Protection Fund, NIPF, to provide succor to various investors that suffer losses due to the insolvency, bankruptcy or negligence of a capital market operators.
A reliable source in the commission told National Mirror yesterday that the investors will be paid this week, as appropriate compensations have been approved by the Verification Committee for the affected investors.
“I can authoritatively confirm to you that in the next one week, the beneficiaries of NIPF will be paid,” the source said.
According to him, the fund managers are the major problem for the commission among the capital market operators, adding that infraction among stockbrokers have reduced to a barest minimum.
He said: “Fund managers are greatest problem even the private operators. People innocently put their money in their care without knowing how it’s being spent. The major infraction is from the fund managers.”
The NIPF, according to a set of rules approved by the SEC’s board, will apply only to defalcations by insolvent or bankrupt capital market operators that are not dealing members of any Securities Exchange or Capital Trade Points.
Accordingly, the NIPF will be for the purpose of compensating investors whose losses are not covered under the NIPF administered by SEC and Capital Trade Points.
A notice at the SEC’s website reads: “Following the inauguration of the National Investor Protection Fund (NIPF) on 26th November, 2015, the Securities and Exchange Commission wishes to inform the general public of the official takeoff of the Fund.
“The Verification Committee of the NIPF has concluded a rigorous verification of investors’ claims against Mega Asset Managers Limited and subsequently recommended approval of appropriate compensation to the affected investors.
“Consequently, the Board of the NIPF at its sitting of 14th December, 2015 approved payment of compensation to the complainants/investors of Mega Asset Managers Limited who appeared before the Commission’s Administrative Proceedings Committee (APC) in the matter.”
It would be recalled that following the launch of the NIPF, the commission said it has set aside N5 billion for compensation of investors who suffer pecuniary losses in the course of their transaction in the capital market.
In his address at the post-Capital Market Committee, CMC, in Lagos recently, the Director General, SEC, Mr. Mounir Gwarzo, informed that the first set of beneficiaries would be compensated.
He stated that compensation has been pegged at N200,000 (two hundred thousand naira) per complaint, adding that the NIPF covers the entire capital market and is broader in scope than a similar fund being promoted by the Nigerian Stock Exchange, NSE, which seeks to provide respite to investors who suffer losses as a result of defalcation by dealing member firms of the Exchange.
He noted that the SEC taxed itself to provide the initial grant, while operators in the market are expected to make annual contribution to the Fund subsequently.