The Securities and Exchange Commission (SEC) has advised the public to desist from the practice of expecting high returns on their investments, sa
The Securities and Exchange Commission (SEC) has advised the public to desist from the practice of expecting high returns on their investments, saying “the higher the returns, the higher the risk”.
Currently, the SEC is in the process of closing down some investment houses, while it has suspended the licences of others.
According to the commission, other investment companies had voluntarily surrendered their licences, while others were facing liquidity challenges.
At a press conference in Accra yesterday, the Director-General (D-G) of the SEC, Reverend Daniel Ogbamey Tetteh, said it was working on deepening the capacity of industry players to help ensure that they had the right people in place.
The event was intended for the SEC to brief the media on how it was addressing ongoing issues and complaints in the asset management industry.
Rev. Tetteh said the SEC had, since 2018, directed some fund managers not to accept any new fixed-term deposits, since their money was currently locked up in one investment or another and, therefore, they were unable to unwind their activities, although they were in distress.
He said those investment houses had been asked to display the directive in their offices.
The D-G called on the public to provide information on any investment house that had those notices but were still collecting fixed investments, adding: “We will come out strongly on them if they pick up any new fixed-term investments.”
Rev. Tetteh called on fund managers to exercise due caution and fiduciary responsibility in making investment decisions.
On some of the initiatives that the SEC was undertaking to sanitise the industry, he said: “We have deployed a mechanism for hearing complaints and will be tracking compliance and taking further action against firms that fail to comply.”
He said directors and senior management members found culpable would face the appropriate sanctions, adding that as part of its risk-based supervision, the SEC was also going to put the spotlight on licensees who had a tall list of complaints against them.
Rev. Tetteh also said the commission was going to disqualify certain licensed individuals who exhibited actions and behaviours inconsistent with the “fit and proper test” from operating in the securities industry.
Another measure to be put in place to ensure that the financial market was sanitised, according to him, was that the commission was going to empower aggrieved investors to pursue their investments, using the court system.
He said the SEC was also responding to the growing menace of Ponzi schemes by collaborating with the various law enforcement agencies.
To ensure that the regulatory environment was also sanitised, the D-G said, the SEC would, among other things, introduce initiatives such as improved licensing requirement, investment guidelines for fund managers, enhance minimum capital or liquidity requirements and collect comprehensive information about licensed operators.
Throwing some light on the Menzgold saga, Rev. Tetteh said up to date the SEC did not know the exact quantum of money that the company mobilised, as it failed to furnish the commission with the information when it requested for it.
On whether customers whose money was locked up in the fund could retrieve their money, he said the SEC could only hope for the best, but added that “no one can give them any guarantee”.
He said what could be done currently was to sell off all the assets of the company, if found, to sort out customers on a pro rata basis; that is, according to their share of the whole.
“If we find out zero, then zero is what will be used to sort out people,” he said, adding: “We are using whatever means to get whatever is out there.”
The Deputy D-G of the SEC, Mr Paul Ababio, said over the past years SEC had received a number of complaints against funded managers with regard to their inability to meet redemption requests.
He said so far total funds under management was GH₵35 billion, with pension funds accounting for 30.5 per cent of it, collective investment schemes were 8.5 per cent, while managed accounts were 61 per cent.
He said 34 per cent of the managed funds was held in government bills and bonds; 12 per cent was invested in listed companies and the remainder spread across banks and savings and deposit-taking institutions (SDIs), 12 per cent in small and medium enterprises (SMEs) and 19 per cent in others.