SEC, Judiciary collaborate on investor protection

SEC DG Mounir Gwarzo

The Securities and Exchange Commission (SEC) and the Nigerian Judiciary have pledged to collaborate in a bid to boost investor confidence in the dispute resolution mechanisms available in the Nigerian capital market.

 

Director General of SEC, Mounir Gwarzo disclosed this at the 2016 Judges Workshop organized in collaboration with the National Judicial Institute (NJI) in Abuja, Wednesday.

 

He said the excellent collaboration between the Apex regulator of the Capital market and the judiciary is crucial to ensure that the rights of investors are protected.

 

The Role and Responsibility of the Commission as provided in Section 13 of the ISA 2007 include the powers to register, inspect, investigate, discipline and suspend any market operator. The Act also gives SEC substantial powers to make rules and regulations and also to impose sanctions on and enforce decisions against erring capital market operators, or their sponsored individuals.

 

“In pursuance of the above mandate, we leverage on stakeholder engagements to share knowledge and information on areas of mutual interest and that is why You cannot downplay the essence of the judiciary especially in terms of investor’s protection. Investors will be very comfortable to invest if when they invest in the market and they are not able to get what they want they can have recourse to finding a way and means that the issue can be resolved.

 

“And the only way such issue can be resolved is when both the capital market and the judiciary are on the same page. The judiciary needs to understand the workings of the capital market; the capital market needs to understand the workings of the judiciary. This is the essence of the collaboration, for us to understand each other better”.

 

According to Gwarzo, Capital markets encompass all parts of the financial system where long-term equity or debt securities are bought and sold. By definition, such markets are highly specialized and governed by distinct sets of rules and regulations.

The Judiciary’s important work he said,  impacts market integrity, investor confidence, market development and market fairness as it is clear that without fair, prompt and effective dispensation of justice, capital markets can never develop. Hence in the Commission’s quest to develop a vibrant capital market in Nigeria, it cannot afford to overlook the central role of the Judiciary.

The DG further disclosed that the Commission has so far paid about 530 investors those that had invested certain amounts of money ranging from N5, 000 to N200, 000 and suffered losses.

 

The Commission inaugurated its National Investor Protection Fund (NIPF) last November, to provide a window of relief for investors that suffer losses due to defalcations by insolvent or bankrupt capital market operators, which are not dealing members of Securities Exchange or Capital Trade Points.

 

In his Keynote address, Chief Justice of Nigeria, Justice Mahmud Mohammed said the workshop could not have come at a better time especially in view of ongoing SEC led capital market reforms aimed at building a world class capital market, coupled with the underlying need to boost investor confidence in the dispute resolution mechanisms available in the Nigerian capital market.

 

Represented by Justice Ibrahim Tanko Mohammed, the CJN said a resilient and efficient dispute resolution mechanism is imperative for a strong and reliable capital market adding that the entrenchment of sound adjudicatory processes must be seen as a precursor to a world class capital market and so, must be accorded priority.

 

“All over the world, capital markets are principally established to mobilize long-term capital for investment and productive purposes. Capital markets play a very significant role in our society because they enhance industrial growth and aid socio-economic development by expediting the rate of capital formation, fostering free enterprise, promoting creativity, advancement and good governance.

 

“Nigeria relies heavily on huge amounts of medium and long term funds for infrastructure development. The economy also utilizes capital to provide support for entrepreneurship, which in turn promotes growth and creation of opportunities. The Nigerian capital market remains the most important source of these long term funds and has continued to perform its conventional function of mobilizing capital for development purposes” he said.

 

The CJN added that the workshop will also afford the participants the opportunity to become better acquainted with other trending issues in the industry such as the precise role of SEC in the current reforms; the need for regulatory reforms in the capital market; corporate governance and the law and procedure of the Investments and Securities Tribunals; the impediments militating against the Nigerian Securities Market and the role of the judiciary in addressing these challenges.