The council of the Nigerian Stock Exchange (NSE) has revoked the dealing licence and expelled some stockbroking firms for fraudulent sales of shares of their clients.
The firms allegedly sold the shares of their clients without authorisation, a reference to common shares fraud where stockbrokers sell clients’ shares to take advantage of market prices or buoy their liquidity.
In a circular issued to all stockbroking firms last week, which was obtained byThe Nation, the NSE indicated that two stockbroking firms were delisted from the membership list at the stock market and their directors and employees embargoed from working in any other stockbroking firm without the approval of the Exchange.
According to the notice, the two firms- Lakesworth Investment & Securities Limited and Gosord Securities Limited, were investigated and indicted for unauthorised sales of investors’ shares.
The multiple fraudulent transactions were in breach of the Article 59, section five of the Rules and Regulations Governing Dealing Members of the Exchange, the charter-like code and mode of operations that regulate stockbrokers at the Exchange.
With the revocation of their licences and expulsion from the market, no dealing members must engage in any type of activity with the firms. Besides, Article 144, subsection C makes it mandatory for any stockbroking firm that may want to employ any of the former employees, directors and executives of the expelled firms to seek clearance from the Exchange.
Source: The Nation