The Securities and Exchange Commission (hereinafter referred to as “SEC”) is the
statutory body mandated by the Securities Industry Act 2016 (Act 929) to
promote the orderly growth and development of an efficient, fair and transparent
securities market in which investors and the integrity of the market are protected.
The SEC has taken note of some deliberate misinterpretation of its directive to
Menzgold Ghana. It is unfortunate that inspite of the simple language employed
in the directive which is still in the public domain, a section of the public still
remain perplexed about the directive.
For the avoidance of doubt the SEC directive stated as follows:
“Accordingly, the SEC hereby directs Menzgold Company limited to shut down
immediately the business of trading in gold collectibles with guaranteed returns
to clients which constitutes, in essence, dealing in securities with neither the
necessary licence nor disclosures authorized by the SEC. No new contracts
should be created and all advertising of the investment business halted with
immediate effect”.
Menzgold responded to the SEC directive through its lawyers on the 12th
September 2018 with a letter referenced as KBA488/18. In the last but one
paragraph which is instructive, it states:
“Under the circumstances we are instructed to inform you that our client finds your
purported directive to shut down or suspend its operations untenable and is unable
to comply with the terms of your letter dated 7th September, 2018 especially
considering the contagion and the effect on the market and its customers”.
The Directive is very clear on its effect, scope and application and should not be
misinterpreted in any other way. Menzgold has instituted proceedings against the
Bank of Ghana and the SEC as second Defendant and the SEC is confident in the
ability of our court system to handle the matter. It is also important to state that
Menzgold has not approached the SEC in any other way whether for settlement of
the matter out of court or to provide the information required by the SEC.
The SEC also wishes to use this opportunity to state very clearly that it has not
instructed any licencee or Fund Manager to vary the terms of its Management
Agreement with client on redemption of funds. The Rule on guaranteeing returns
has existed in the Compliance Manual for Broker-Dealers, Investment Advisers
and Representatives since January 2008. On the 14th day of April 2014 and the
31st day of March, 2015 respectively, Circulars with Numbers
SEC/CIR/001/2014 and SEC/CIR/002/03/15 were issued by the SEC
cautioning fund managers about the forbidden practice of guaranteeing returns
and issuing fixed deposits to clients. The recent Directive with number
SEC/FM/DIRECTIVE/06-18 issued on the 18th June 2018 only provided a final
transition period to completely fade out that illegal market practice. The SEC has
not requested any fund manager to revise its provisions in Management
Agreements executed with clients on redemption of funds over an extended period
whatsoever. Clients should insist on enforcing the terms and provisions on client
redemption provisions according to the Management Agreement by the Fund
Manager and the Client.
The SEC shall ensure full compliance with its latest directive and all previous
circulars on the illegal practice of guaranteeing returns and issuing fixed term
investments mentioned above.
The Commission wishes to assure all investors and the general public that it is
committed to ensuring rigorous enforcement of all the rules for operators in the
capital market in order to promote the growth and development of an efficient,
fair and transparent securities market in which investors and the integrity of the
market are protected.
For any further information, members of the general public are kindly
requested to call the Commission’s Toll Free line numbered 0800100065.
This Notice is issued pursuant to section 3, 208 and 209 of the Securities
Industry Act, 2016 (Act 929)
BY ORDER OF THE
SECURITIES & EXCHANGE COMMISSION.
Dated the 11th November 2018
