A little-known stockbroking firm, Adonai Stockbrokers Limited, was on June 19 suspended by the Nigerian Stock Exchange (NSE) over alleged infractions, including the unauthorised sale of an investor’s share.
The firm is the latest to face the NSE’s regulatory hammer since 2017 when several dealing firms were disciplined for various offences.
Details of the company’s suspension and more were contained in a regulatory report titled Dealing Member Firms Involved in Unauthorised Sake and Misappropriation of Clients’ Funds as published on the NSE website.
According to the NSE, the company had also allegedly made use of a client’s funds and segregated client’s funds, while also guilty of other prohibited practices.
“The firm was suspended on the 19th June 2018 following its violations of The Exchange’s rules including, but not limited to: Rule 11.9: Prohibition of Unauthorised Sale of Securities, Rule 11.3: Prohibited Practices, and Rule 11.8: No Unauthorised Use of Client Funds; Segregation of Client Funds, of the 2015 Rule Book of The Exchange (Dealing Members’ Rules).” – NSE
A recurrent development
This is not the first time that the Nigerian Stock Exchange has punished stockbroking firms and Dealing Members for bad behaviour in the capital market. As we reported, some firms were fined earlier this year by the regulator.
Note that the Exchange has suspended about 36 firms and 7 stockbrokers for trading-related offences between January 2012 and August 2018.
The NSE is putting measures in place to rid the system of fraud
In view of the rising cases of fraud perpetrated by stockbroking firms, the Nigerian Stock Exchange had put in place measures in the forms of regulatory frameworks and sanctions aimed at deterring offenders.
One of such is a set of newly-amended rules designed to prevent unauthorised shares transfers by stockbroking firms. These rules make it possible for the NSE to revoke the license of any firm that unlawfully transfers shareholders’ shares, while also imposing fines on the offender.
The new rules also stipulate that “a Dealing Member that has sold or transferred any securities without the authorisation of the owner shall not be permitted to keep any benefits accruing from such transaction.”
All effort by Nairametrics to reach Adonai Stockbrokers Limited for comments on their alleged wrongdoing proved abortive.