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Share deals put 20 directors on Stock market blacklist

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The Securities and Exchange Commission (SEC) and Nigerian Exchange (NGX) have blacklisted 20 directors from participating in capital market activities over inappropriate shares dealings.

The latest update of the capital market ‘Blacklist’ obtained yesterday showed that the directors were added in the latest wave of crackdowns on capital market infractions.

The ‘Blacklist’ is an official record of all corrupt persons and indicted officials who are deemed unfit to engage in stock market activities.

It was opened after the 2018 amendment of the NGX rules, which enabled it to open a formal record to be known as “blacklist” for the purpose of records of corrupt persons. The amendment was approved by the SEC in December 2018.


The ‘Blacklist’ draws concurrence from investigations and disciplinary actions by both SEC and NGX, which are by virtues of extant laws and rules mandated to maintain the orderliness of the Nigerian capital market.

The affected directors included directors of four stockbroking firms – Amyn Investment Limited, Cashcraft Securities Limited, Mutual Alliance Investment and Securities Limited and Quantum Securities Limited. All the directors have been placed on a 10-year ban till 2031.

Sources said the blacklisted firms and their directors were indicted for capital market infractions, including unauthorised sales of clients’ shares, engaging in phony investment schemes, misrepresentation, non-remittance of clients’ sale proceeds and sundry acts capable of adversely affecting the image of the capital market and investors’ confidence.

With the blacklist, the indicted persons will not be able to work in any stockbroking and investment firms in Nigeria, as well as holding any position in any capital market-related institutions, including publicly quoted companies and unlisted firms regulated by SEC.

Under the rule known as “Specific Actions Requiring Prior Consent of The Exchange”, a dealing member shall not be allowed to employ some categories of persons without the prior written consent of the Exchange.

These included directors, authorised clerks or other persons including principal officers such as the chief executive officer, chief finance officer, chief compliance officer and chief risk officer, who have been indicted by the NGX or SEC.


Others included any person who was an officer or employee of a dealing member expelled from the Exchange, any person expelled, as an authorised clerk or its equivalent, from any other exchange, any person refused admission as a member of the Chartered Institute of Stockbrokers or any person expelled from its membership, any person expelled as a member of any professional association or institute and any person who is insolvent or has been convicted of theft, fraud, forgery, or any other crime involving dishonesty

The indicted persons may also not be able to practice or operate in any country or jurisdiction where Nigeria has a subsisting Memorandum of Understanding (MoU) on capital market cooperation.

The “blacklist” contains persons who were blacklisted for various crimes ranging from unauthorised sale of client’s shares, diversion of funds, professional misconduct and aiding and abetting criminal activities.

Those on the “blacklist” include stockbrokers, accountants, directors, compliance officers, registrar and information and technology specialists among others.

To be added to the “blacklist”, the Exchange must have established a prima facie case and indicted such persons. Any blacklisted person shall no longer be entitled to privileges, services, recognition or access to the Exchange and its facilities. Such a person also shall not be permitted to deal or transact with or be employed by a dealing member or person.

The “blacklist” rule applies to all dealing member, an authorised clerk, an employee or director of a dealing member, a sub-broker, or any other capital market operator.

According to the rules, any person blacklisted by the Exchange may however apply to the Exchange for reinstatement after the expiration of the blacklisting period imposed by the Exchange; or where the blacklisting is not for life, a reasonable period has elapsed where no period is specified by the Exchange.

Any person applying for removal from the blacklisting and reinstatement into the capital market must “provide compelling reasons” in support of his or her application.

The “Blacklist” was meant to strengthen the hands of the Exchange in its fight against unauthorised sales of investors’ shares and diversion of proceeds by capital market operators.

It was learnt that about 90 per cent of blacklisted persons were due to unauthorised sales of client’s shares.

Other ranking crime was manipulation of the market or share prices.

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BUSINESS

UK inflation hits new 40-year high of 10.1% as food and energy price surge continues

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U.K. inflation rose to another 40-year high in July as spiraling food and energy prices continued to intensify the country’s historic squeeze on households.

The consumer price index rose 10.1% annually, according to estimates published by the Office for National Statistics on Wednesday, above a Reuters consensus forecast of 9.8% and up from 9.4% in June.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 6.2% in the year to July 2022, rising from 5.8% in June and ahead of projections of 5.9%.

British 2-year Gilt yields surged on Wednesday morning after the release, adding more than 26 basis points to reach 2.41%, their highest point since November 2008.

Rising food prices made the largest upward contribution to annual inflation rates between June and July, the ONS said in its report.

“Supermarkets have had little choice but to pass on price increases from suppliers, themselves contending with unprecedented inflation in raw material and ingredient input costs,” said Kien Tan, director of retail strategy at PwC.

“This has been particularly acute in labour and utility intensive categories like dairy, with reports of the price of a pint of milk having more than doubled in some stores since the start of the year.”

The ONS repeated that its indicative modelled consumer price inflation estimates “suggest that the CPI rate would last have been higher around 1982, where estimates range from nearly 11% in January down to approximately 6.5% in December.”

The Bank of England has implemented six consecutive hikes to interest rates as it looks to rein in inflation, and earlier this month launched its largest single increase since 1995 while projecting that the U.K. will enter its longest recession since the global financial crisis in the fourth quarter of the year.

The Bank expects inflation to top out at 13.3% in October. Conservative Party leadership candidates Liz Truss and Rishi Sunak, one of whom will succeed Boris Johnson as prime minister on Sept. 5 after a poll of party members, are under increasing pressure to offer radical solutions to the country’s historic cost-of-living crisis.

The latest forecasts suggest the U.K.’s energy price cap could rise to £4,266 ($5,170) annually early next year from its current £1,971, with many households already choosing between heating and eating. The cap is expected to rise to more than £3,000 in October following the next review.

Real wages in the U.K. fell by an annual 3% in the second quarter of 2022, according to ONS data published Tuesday, the sharpest decline on record.

Despite average pay excluding bonuses increasing by 4.7%, the cost of living is far outpacing wage growth and squeezing household incomes.

“Today’s inflation figures serve as a further reminder to many UK households that they are facing a period of considerable financial hardship,” said Dan Howe, head of investment trusts at Janus Henderson.

“Consumers are already grappling with rising energy costs and surging household prices, all compounded by a lack of decisive action at the political level. Amid talks of strikes and energy blackouts, there is no doubt that tough decisions lie ahead of U.K. families.”

Richard Carter, head of fixed interest research at Quilter Cheviot, predicted that the Bank of England will likely respond at its next monetary policy meeting with yet another 50 basis point interest rate hike in a bid to combat inflation, and said there is no doubt that the cost-of-living crisis is going to get worse before it gets better.

“As such, there will no doubt be a lot of pressure on the next Prime Minister to help soften the blow and the Bank of England will continue to have a very difficult job on its hands,” he added.

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External reserves sustains downward trend, sheds $337m in 2wks

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Nigeria’s external reserves fell by $337 million in the first two weeks of August, maintaining its declining trend since the middle of last month.

Data from the Central Bank of Nigeria showed that the external reserves fell to $38.882 billion on Thursday August 11th, 2022, from $39.219 billion at the end of July 2022.

This indicates that the external reserves has lost $563 million since July 18, when it commenced the latest downward trend.

Prior to July 18, the external reserves had maintained a 40 days upward trend, rising by $976 million to $39.445 billion from $38.421 billion on June 6th, buoyed by rise in the price of crude oil, which accounts for over 80 per cent of the nation’s foreign exchange  earnings.

However, analysts at Financial Derivatives Company Limited, FDC, attributed the declining fortunes of the reserves since July 18 to increased dollar sales by the Central Bank of Nigeria, CBN, in its bid to stabilise the exchange rate.

While projecting further decline in the external reserves, they however maintained that the increased dollar supply by the apex bank will lead to appreciation of the naira at the official and parallel market.

Making this projection in the FDC Bi-Monthly Economic Bulletin, they said: “The depletion on the reserves was majorly due to CBN’s supply of foreign exchange to stabilise the currency.

“The external reserves is expected to continue its downward trend as the CBN intensifies its efforts to stabilise the currency by supplying foreign exchange to the I & E (Investors and Exporters) window.

“Because of the country’s low oil production levels, high oil prices may have less of an impact on the country’s external reserves.

“A constant depletion of the external reserves is likely to discourage the CBN from supplying foreign exchange in the foreign exchange market. This could further stoke currency depreciation as demand outpaces supply.”

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Nigeria loses N101bn worth of oil, says OPEC

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Nigeria’s crude oil production plunged by 2.3 million barrels in July 2022 when compared to what the country produced in the preceding month of June, data from the Organisation of Petroleum Exporting Countries showed on Thursday.

In its latest Monthly Oil Market Report for August 2022, OPEC stated that crude oil production figures based on direct communication indicated that Nigeria’s output dropped by an average of 74,000 barrels per day in July.

This implies that for the 31 days in July, the country lost about 2.3 million barrels of crude oil. The organisation further stated that the average cost of Brent crude, the global benchmark for oil, during the month under review was $105.12/barrel.

By losing 2.3 million barrels in July this year, it means Nigeria’s oil earnings fell by about $241.1m or N101.13bn (at the official exchange rate of N419.37/$) in the month under review.

Data from OPEC showed that Nigeria’s oil production in June 2022 was 1.158 million barrels per day, but this dropped to 1.084 million barrels per day in July.

The country had produced 1.024 million barrels per day in May this year, according to figures released by OPEC on Thursday.

The Federal Government, operators and experts have consistently fingered crude oil theft in the Niger Delta as the major reason for Nigeria’s poor output and its continued failure to meet the monthly oil production quota approved by OPEC.

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, blamed the challenges in the oil sector on the high level of insecurity across the country.

This, he said, had continued to discourage investors in the sector, leading to lower production of crude oil and lower earnings for Nigeria despite the increased cost of crude.

He said, “Investors in the oil and gas sector continue to lament the challenges posed by insecurity, oil theft, unstable policies and inappropriate fiscal regimes.

“The downstream sector has continued to be weighed down by the pricing regimes and the regulatory environments which have continued to dim the growth prospects in the sector.”

Meanwhile OPEC stated that crude oil prices dipped in July, as against their costs in June, adding that crude in OPEC Reference Basket fell by $9.17 or 7.8 per cent month-on-month in July to average $108.55/barrel.

“Oil futures prices remained highly volatile in July, amid a sharp drop in liquidity. The ICE Brent front month declined $12.38 or 10.5 per cent in July to average $105.12/barrel and NYMEX WTI declined by $14.96 or 13.1 per cent to average $99.38/barrel,” the global oil cartel stated.

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