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Stock Exchange expels stockbroking firm

Stock Exchange expels stockbroking firm

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Authorities at the Nigerian Stock Exchange (NSE) have revoked the operating licence of Alliance Capital Management Company Limited and expelled its management from the capital market. The NSE  expelled no fewer than 90 stockbroking firms in 2017.

A regulatory document obtained by The Nation indicated that the decision to expel the firm was taken by the National Council of the Exchange, the highest administrative organ of the NSE.

The NSE stated that the revocation and expulsion was due to deregistration of the firm as a capital market operator by the Securities & Echange Commission (SEC), the apex capital market regulator.

“Dealing members are advised not to engage in any activity with the above mentioned firm,” the NSE stated.

With the expulsion, the stockbroking firm will not be able to trade in the Nigerian stock market and other international markets that Nigeria has Memorandum of Understanding (MoU) with. Nigerian capital market authorities have standing bilateral agreements with several other jurisdictions including Morocco, Angola, China, Ghana, Kenya, Malaysia, Mauritius, South Africa, Tanzania and Uganda.

With the expulsion, investors who have their investment accounts with the expelled stockbroker, will be required to move their accounts to other functional stockbroking firms.

Also, directors, executives, top management and other employees of Alliance Capital Management Company Limited will not be able to secure any employment in the capital market without prior clearance and written consent of the Exchange.

The Exchange noted the need for stockbroking firms to ensure compliance with extant rules and regulations on dealing with employees and directors of expelled firms.

Under Rule 6.12 of the Rulebook of the Exchange, 2015, members of the Exchange are disallowed from employing any of directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the Exchange or the Commission without prior regulatory approval.

Also, the rule disallows other stockbroking firms from employing any person who was an officer or employee of a stockbroking firm or dealing member expelled from the Exchange; any person expelled, as an authorised clerk or its equivalent, from any other exchange; any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership; any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty.

The Rulebook of the Exchange 2015 provides that: where the Exchange revokes a dealing member’s licence, the Exchange shall immediately commence the process of expelling such dealing member.

Besides, the rules empower the NSE to suspend any authorised clerk or revoke the registration of any authorised clerk who has breached any rules or regulations of the Exchange or is found to be complicit in any breach of such rules or regulations.

Also, suspension of any stockbroking firm by SEC will lead to immediate suspension by the NSE while revocation of any broker’s registration will lead to expulsion of the firm by the NSE.

“Without  prejudice  to  all  the  remedies  open  to  the  dealing  member,  where  a  dealing member is suspended by the Commission, as soon as the Exchange is notified, it shall immediately  commence  the   process   of  suspension or  expulsion of   the   dealing member.

“Where a Dealing Member’s registration is revoked by the Commission, as soon as the Exchange  is  notified,  it  shall  immediately  commence  the  process  of  expulsion  of  the dealing member,” the rules stated.

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