SEC drafting new bill to establish Investor Compensation Fund – Director-General

The Acting Director-General of the Securities and Exchange Commission (SEC), James Klutse Avedzi, says the Commission is working on a new bill that will create an Investor Compensation Fund to protect investors in Ghana’s capital market further.

According to him, the fund will serve as a safety net for investors who may lose their money through no fault of theirs despite SEC’s monitoring and regulatory interventions.

“The new bill we are working on is making provision for the creation of a fund we call the Investor Compensation Fund. That fund will be there in case that despite all the regulations, monitoring, and supervision, something goes wrong in a particular company and the investors lose money. Some amount can be given back to them to cushion them. This is another way of protecting investors,” he explained.

Avedzi said this during a public engagement held in Koforidua, as part of SEC’s nationwide investor education campaign aimed at raising awareness about the Commission’s role and the importance of financial literacy.

Thousands of customers have had millions of cedis locked up in various fund management institutions that collapsed during the financial sector clean-up exercise under the President Akufo-Addo-led government.

The affected customers continue to agitate for the Bank of Ghana and the Ministry of Finance to pay their lost funds.

The Director General of Securities and Exchange Commission, James Klutse Avedzi, said the introduction of the capital market education is to help young people understand how the sector mobilises long-term capital for economic development.

The SEC boss cautioned the public against the increasing number of fraudulent online investment schemes taking advantage of technological advancements.

“Because of the advancement in technology, there are a number of fraudulent offers circulating online. They lure the public to fall prey to schemes designed to defraud them,” he noted.

He added, “If an offer is too good to be true, like investing 100 Ghana cedis to get 1,000 cedis in a week, it is a fraud. There is no genuine investment that gives such unrealistic returns.”

He advised the public to always verify the authenticity of any investment platform with the SEC before committing funds.

“If the company is not licensed or regulated by the SEC, then you are putting your money at risk or throwing it away,” he warned.

Nonetheless, Jame Kludze Avedzi assured that SEC will ensure all regulated entities comply with rules that safeguard investors’ interests. Companies that violate these regulations face sanctions, including suspension of licenses.

“If we realise that they are not doing the right thing, we suspend their license and inform the public not to do business with them. That is how we protect investors,” he said.

Avedzi further clarified that fund managers are not allowed to guarantee fixed returns to investors, as such promises are often deceptive.

“A fund manager’s duty is to invest wisely on behalf of the investor, not to promise guaranteed returns. If we find any doing so, we stop them because we know investors could lose their money,” he added.

Eastern Regional Minister Rita Akosua Adjei Awatey said public education is key to enlightening and boosting public confidence in the securities sector.