SEC asked to provide clarity on collapsed investment firms

The Securities and Exchange Commission (SEC) has been urged to provide clarity on the way forward for investors whose monies have been locked up with the 57 collapsed investment firms.

This is to help reduce investor panic and forestall a run on the remaining industry players.

The Executive Secretary of the Ghana Securities Industry Association (GSIA), Ms Marian M. Dsane, who made the call in a statement released on behalf of the association in Accra yesterday in reaction to the action taken by the SEC last Friday, said “There must also be a clearly spelt out process for firms whose licences have been revoked and who feel they may have a genuine case for review.”

She called on the Ministry of Finance (MOF), the Securities and Exchange Commission (SEC) and the Bank of Ghana (BOG), to urgently support the investment industry by pushing the Receivers of the defunct Savings and Loans (S&Ls), Finance Houses and Microfinance firms (MFIs) to pay their liabilities to fund management firms with validated exposures.

While appealing to investors not to engage in any panic withdrawals, Ms Dsane said “Poor governance and ethics played a part in this industry’s current challenges but the banking sector clean-up was the final trigger causing the liquidity challenges that some firms face”.

She also pointed out that the “Piecemeal pay-outs for validated exposures exacerbate these liquidity challenges and given that pronouncements have been made that no depositors will lose their funds, it is important that validated claims by Fund Managers are immediately honoured.”

Investor assurance

Explaining the conditions of the industry, she said “The industry is no worse off today than it was before the action by the SEC.”

According to her, 21 of the firms whose licences had been revoked were already not operational and several of the 32 which were operating were already facing serious governance, operational and liquidity challenges.

“There are several robust fund management firms that are liquid and operating with healthy balance sheets and we are confident that these will continue providing solid services to the investing public”, Ms Dsane added.

Role of investment industry

She said the investment industry is the understated complement to the banking sector.

Ms Dsane said the industry’s average growth – 69.5 per cent per annum over the past decade and its size of up to Gh¢40 billion are clear pointers to its importance to the broader economy.

“In order for it to continue playing its intermediation role in the economy it will need a better resourced and engaged regulator, a well-informed investing public and robust, well governed firms that act in the interest of clients”, she said.

Ms Dsane said “We wish to assure the investing public that the GSIA will engage with all key stakeholders in order to promote a healthy and vibrant industry that creates wealth for all”.

SEC action

Last Friday (SEC) revoked the licences of 53 fund management companies. The action was meant to protect investor interest and the integrity of the capital market.

Based on the action, the Ms Dsane said the association “welcomes any moves that will shore up the industry and ultimately boost investor confidence”.