SEC revokes licenses of 53 Fund Management Companies

The Securities and Exchange Commission (SEC) has, with effect from Friday, November 8, revoked the licences of Fifty-Three (53) Fund Management Companies.

The actions were taken pursuant to Section 122 (2) (b) of the Securities Industry Act, 2016 (Act 929 or “the Act”), which authorises the Securities and Exchange Commission to revoke the license of a market operator.

“The revocation of the licences of the specified companies has become necessary as they have largely failed to return client funds, which remain locked up and in a number of cases, they have even folded up their operations. Essentially, they have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions, despite opportunities provided to them by the SEC within a reasonable period of time to resolve all regulatory breaches. “

A statement from the Commission and copied to the Ghana News Agency named the companies as; Alpha Cap Limited, Beige Capital Asset Management Limited, Cambridge Capital Advisors Limited, EM Capital Limited, Energy Investments Limited, Fromfrom Capital Limited, Gold Rock Capital Management Limited, Heritage Securities Limited (formerly Futurepip Asset Management, Kamaag Kapital Limited (formerly Lifeline Asset Management, Kron Capital Limited, Mak Asset Limited, Man Capital Partners Limited, Mcottley Capital Limited, Mec-Ellis Investments (Ghana) Limited, Nickel Keynesbury Limited and SG Royal Kapita Limited.

Others are; Standard Securities Limited (formerly ASN Investments Limited, Tikowire Capital Limited, Ultimate Trust Fund Management Limited, Universal Capital Management Limited and Weston Capital Limited.

The statement also mentioned names of fund managers whose licenses were revoked as; All time Capital Limited, Apex Capital Partners, Axe Capital Limited ( Formerly United Asset Management, Blackshield Capital Management (formerly Gold Coast Fund Management, Brooks Asset Management Limited, Canal Capital Limited, Corporate Hills Investment Limited , Dowjays Investment Limited, Firstbanc Financial Services Limited, Frontline Capital Advisors Limited, Galaxy Capital Limited.

Others are; Global Investment Bankers Limited, Goldstreet Fund Management Limited (formerly Goldstreet Investment Limited, Ideal Capital Partners Limited, Intermarket Asset Management Limited (formerly CDH Asset Management), Integrity Fund Management Limited, Kripa Capital Limited, Legacy Fund Management Limited (formerly Legacy Financial Services Limited ), Liberty Asset Management Limited  and Monarch Capital Limited.

The rest are; Mutual Integrity Asset Management Limited, Nesst Capital Limited, Nordea Capital Limited, Omega Capital Limited, Procap Finance Limited, QFS Securities Limited, Sirius Capital Limited, Strategic Hedge Capital Limited, Supreme Trust Capital Limited, Unisecurities Ghana Limited, Utrak Capital Management Limited and Wealth Vision Financial Services Limited.

The statement said the authorised agent of SEC (and the Liquidator once appointed) will work together with the Government to pay a capped amount to all affected investors of the firms in line with government’s commitment to support the securities industry and to provide some immediate relief to investors who were hurting because of their locked-up funds.

It said the outcome of the court process would inform the handling of assets retrieval and liquidation to further sort out validated investor claims.

“By the close of business on Monday the 11th of November 2019, SEC, together with its authorized agent, will provide further details about the validation process and specific locations, where investors can present their claims to be validated.

“In the interim we urge all investors to remain calm, gather all receipts, statements and any other documentation related to their investment with the affected institutions.

“There is also no need for any panic withdrawals on the firms whose licences are intact and not on the revocation list. A list of firms whose licences have not been revoked can be found on the SEC website (”

The SEC, pursuant to its mandate under Securities Industry Act ( Act 929) to protect investors, maintain surveillance, monitor solvency and protect the integrity of the Securities market, carried out on site and off site supervisory activities including; the  review of reports submitted by Fund Managers, On-site inspections of Fund Managers, Forensic audits, and Complaints Hearings.

The statement said reviews and investigations identified  infractions by the specified institutions, summarised  as Guaranteeing of returns contrary to the directive of the Commission; Failure to honour client redemption requests; Failure to honour payment terms agreed at Complaints Hearings; Failure to place client funds with proper due diligence and the requisite standard of professional conduct, evidenced by over concentration of portfolios in high risk institutions and related party transactions resulting in severe liquidity challenges;  Failure to segregate client funds from operational funds and in some cases using client funds to pay for operational activities;

Other infractions according to the statement were Closure of offices without following due process;
Persistent regulatory breaches including; failure to submit reports as required;  Corporate governance weakness with weak Board oversight, poor accountability, and override of Investment guidelines; and/or Failure to monitor and inject liquidity to comply with required levels.

The statement said all efforts by the SEC to get Directors and Management of the affected institutions to rectify the above lapses yielded no positive results.

“Consequently, the liquidity challenges of the companies continue to deteriorate leading to twenty-one (21) of them closing their offices and absconding with clients’ funds without due process, whilst those currently operating have severe challenges in meeting clients’ requests for a return of their funds or investments.

“Given the increasing number of challenges facing investors in retrieving their investments and the challenges facing the affected Fund Managers, which in turn pose risks to the stability of the financial system, the SEC is sanitizing the Fund Management sub-sector through a revocation of licences in accordance with section 122 of Act 929.

The statement said SEC was committed to ensuring that the Fund Management Sub-sector remained supportive of the Capital Market growth and the economy as a whole and would continue to regulate and promote the growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected.

Source: GNA

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