The protracted legal dispute between First City Monument Bank Plc and Valueline Securities and Investment Limited (a stockbroking firm) has finally been resolved by the Investment and Securities Tribunal.
The legal dispute, which was centered around the repayment of a controversial ₦2.5 billion shares purchase fund that was misappropriated by the now-defunct Finbank Plc, had been on since 2008. First City Monument Bank Plc had merged with Finbank in 2012.
Valueline Securities and Investment Limited had instituted the suit ten years ago, while implicating City Monument Bank Plc, the Securities and Exchange Commission, and the Central Bank of Nigeria.
Meanwhile, delivering the judgment in Abuja recently, the Investment and Securities Tribunal ruled that FCMB should pay the claimant some ₦988,533,205.86 in addition to accrued interest calculated at 18%, being repayment of an outstanding loan.
First City Monument Bank was also mandated to pay a penalty charge of about ₦500.000 which will go to the claimant as the cost of legal action. FCMB will also pay a 10% 10% interest on the judgment debt from the date of the judgment until final defrayment.
Background to the case
Valueline Securities and Investment Limited in 2008 paid the sum of ₦2.5 billion for the purchase of shares during a Finbank public offer. Unfortunately, the stockbroking firm was neither allotted the shares nor refunded the ₦2.5 billion; in line with capital market regulations.
Consequently, the claimant petitioned the Securities and Exchange Commission who investigated the matter and found the bank guilty, thereby ordering it to refund the money with 18% interest per annum; starting from the date of public offer till liquidation of same.
Following the bank’s failure to adhere to the ruling by SEC, the Central Bank of Nigeria had to intervene. This also happened to be the same time Finbank Plc and First City Monument Bank were finalising their agreement. FCMB agreed to offset the debt, provided that SEC would allow the merger to take place.
However, when the bank failed to pay, the SEC sought the intervention of the CBN; coincidentally, at the time when the FCMB and Finbank were planning a merger. An All Parties Meeting (APM) was convened where the FCMB undertook to repay the indebtedness of Finbank and for its account with the CBN to be debited at source by CBN provided the merger of the two banks was approved by SEC to succeed.
The bank later claimed that it had paid the sum of ₦4.6 billion to the firm, said sum which included the initial ₦2.5 billion plus the accrued interest of ₦2.1 billion. The claimant, however, faulted the claim, saying that FCMB never really repaid the full debt.
In light of these developments, the Central Bank of Nigeria and the Securities and Exchange Commission formed a joint investigative team which “changed the original SEC computation formula for the repayment following a petition by FCMB Plc and without informing or involving the claimant.”
Meanwhile, in the latest ruling, the tribunal had tried to determine the following-
- Whether FCMB has really complied with the directive to pay the debt
- Whether FCMB is still indebted to the claimant and
- Whether the claimant is entitled to the reliefs it sought in its originating application.
The tribunal, therefore, ruled in favour of the stockbroking firm, while nullifying CBN and SEC’s decision to change of the computation formulae.