Have faith in existing fund management firms — Securities Industry Association

The Ghana Securities Industry Association (GSIA) has advised the investing public to remain calm and eschew panic withdrawals as the remaining companies were liquid, robust and better placed to serve their needs and protect their investments against losses.

The assurance followed the revocation of the licences of 53 fund management firms by the Securities and Exchange (SEC) for various contraventions of the law.

In a statement issued on November 11, 2019 the association said "there is no need for panic withdrawals by investors" as the industry was not worse off today than it was prior to the licence revocations.

The statement was issued by the Executive Secretary or the association, Ms Marian Dsane, on behalf of its Governing Council.

It explained that 21 of the affected firms were already out of business while the remainder that were operational prior to the regulator's action were facing serious operational, governance and liquidity challenges.

In spite of the revocation of the licences, the association said it was aware of several fund management firms that were liquid and operating with healthy balance sheets.

Consequently, it said it was optimistic that these firms would continue to offer investment services to the general public, hence no need for people to rush into withdrawing their investments.

The GSIA, which is an umbrella body of fund management companies in the country, also pledged its support for SEC exercise, noting that "the action was meant o protect the investor interest and the integrity of the capital market."

"We welcome moves that will shore up the industry and ultimately boost investor confidence," the statement said.

It, however, noted that the Ministry of Finance, the SEC and the Bank of Ghana (BoG) needed to "urgently support the investment industry" by pushing the receiver and the liquidator of the failed savings and loans companies, microfinance companies and the finance houses "to pay liabilities to fund management firms with validated exposures."

"Poor governance and ethics played a part in the industry's current challenges but the banking sector clean up was the final trigger causing the liquidity challenges that some firms faced.

"Piecemeal payouts for validated exposures exacerbate these liquidity challenges and given that pronouncements had been made that no depositors will lose their funds, it is important that validated exposures of fund managers are immediately paid," it said.

It also called on the SEC to "provide clarity on the path forward" to investors whose funds were with the collapsed firms to help provide confidence to the general public.

Below is the statement