Body to withdraw stockbroker licences for illegal sales of shares

folarin okunola

March 17, 2016 8:57 AM

The NSE explained on its website that the new newly amended rules are aimed at clamping down on unauthorised sale and transfer of shares by criminal-minded stockbroking firms and traders.

The Nigerian Stock Exchange has had a topsy-turvy few months this year

Media reports reveal that the Nigerian Stock Exchange (NSE) has started the implementation of new rules to guard against unethical practices by stockbrokers, as part of efforts to ensure that operating rules are effective to serve as deterrents to market abuse.

The statement added that the NSE could withdraw the dealing license of any stockbroking firm and trader found to be engaging in such activities as well as impose fines not less than N1 million on any offender.

According to the rule, no dealing member shall sell or transfer any securities without the authorization of the owner, Nigeria CommunicationsWeek reports.

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“A dealing member that has sold or transferred any securities without the authorisation of the owner shall not be permitted to keep any benefits accruing from such transaction, including but not limited to bonuses, rights, commissions, cash dividends, capital appreciation, and any profit accruing therefrom whatsoever,” the rule states.

It states further that any dealing member that sells or transfers securities without the authorisation of the owner will have to buy back the securities along with any accrued benefits within 14 business days.

“Besides, where the unauthorised sale transaction is worth N5 million and below in value, the erring stockbroking firm will be liable to pay a fine of N1 million or three times the value of the sale or transfer, whichever is higher, and N5, 000 for every day from the day on which the dealing member is required to buy back the securities by the Exchange until the day the dealing member completes buying back the shares for the owner.

“Where the illegal sale transaction is higher than N5 million in value or the dealing member has engaged in such unauthorised sale, or transfer of securities on a previous occasion, it shall have its dealing license withdrawn by the council of the Exchange and shall in addition be liable to pay a fine of N5 million or three times the value of the sale or transfer, whichever is higher and N5,000 for every day from the day of the sanction until the day the dealing member completes buying back the shares for the owner,” the new rules further state.

folarin okunola