SEC warns Nigerians against private placement

Friday Ekeoba, Lagos - 18.02.2008

The Securities and Exchange Commission (SEC) has expressed concern over the recent increase of private placements by some private companies in the country even as it called on the public to be wary of such transactions.

The commission said the companies, which were offering their shares to raise money from unsuspecting members of the public, should be well scrutinised before any business was done with them.

The Head, Media of the commission, Mr. Lanre Oloyi, who gave the advice in a statement made available to the Nigerian Tribune at the weekend, said the public should know that the securities of wholly private companies were not registered with the commission as private companies were by law outside the regulatory purview of SEC.

He noted that any company that had membership in excess of 50 persons was by law a public company and, therefore, required to comply with the requirements of the commission in terms of making offers to the public.

“Members of the public who buy shares of private companies that are neither registered by the commission nor listed on the Nigerian Stock Exchange (NSE) are therefore doing so at their own risks”, the statement said.

According to him, SEC was committed to effectively regulate and develop the Nigerian Capital Market and make it investor-friendly.

The Director General of the Nigerian Stock Exchange (NSE), Professor Ndi Okereke-Onyuike had earlier warned investors to be cautious with their investment in private placement as it had become an avenue for some unscrupulous individuals or non-quoted companies to siphon people’s money.

Meanwhile, the Director General of SEC, Musa Al-Faki, has promised tough times for quoted companies and capital market operators that indulge in unethical practices this year.

According to him, this year was going to be a tough one for those found guilty as the commission would leave no stone unturned in sanitising the market.

Al-Faki, who disclosed this at the weekend in Lagos at the commission’s annual media luncheon for business editors and capital market correspondents, lamented that what was happening in the market now was disheartening and could erode investors’ confidence on the market.