SEC to revoke licences of more investment banks

The Securities and Exchange Commission (SEC) will soon shut down some investment firms operating in the country after it completes an ongoing forensic audit of some 21 investment companies, the Deputy Director-General of SEC has disclosed.

According to Paul Ababio, who refused to give further information on these firms, SEC is currently assessing the risk exposure levels of the 21 firms through a third party whose duty is to verify their assets and ascertain their interconnectedness to other players in the financial sector.

He said the commission has embarked on this move following complaints it received from customers of these investment banks.

“We had some complaints from the market about certain investment firms. What are we doing is to assess the level of exposure that the firms have; the level of risks in those businesses and then coming out of that, we will have a better understanding of the status of their operations,” Mr Ababio said.

“In our regular inspections, we get an appreciation of the state of these firms, but sometimes you need a third party to come in to verify where the assets are, and like how we talked about the interconnectedness. You get a better appreciation on actions you can take coming out of that,” he added.

Mr Ababio indicated that the commission will then take a decision to either shut down insolvent firms or provide support for those that are in good standing.

“It is highly likely we will see some revocation of licences. Some firms have actually surrendered their licences but we will take actions. Some will involve revocation some will involve suspension. But some will also involve restructuring,” he noted.

“We will obviously take a decision; some firms may have to be wind up. Other firms may be recoverable so if the portfolio is in good standing and can recover from where their positions are, we will ask them for a roadmap on how to address the challenges they face and how to also address investor concerns, and we hope that coming out of this certain significant actions will be taken to resolve some the challenges in the industry,” he explained.

It would be recalled that SEC, in April 2019, revoked the licences of some five investment companies; namely, Georgetown Capital Partners Ltd, Equity Capital Ltd, Index Analytics Ltd, DM Capital Ltd, and Oxygen Advisory Ltd. In pursuant to Section 122 of the Securities Industry Act, 2016 (Act 929).

Mr Ababio spoke to The Finder yesterday on the sides of Stanlib Dialogues 2019 on the theme ‘Surviving the Storm: Can the investment industry survive banking sector reforms?’

The event, organised by Stanbic Bank Ghana’s asset management arm, Stanlib Ghana, brought together representatives from across the financial sector, who discussed the health of the country’s investment banking industry.

The panellists were Mrs Elsie Enninful-Adu, member of the Governing Council of Ghana Securities Industry Association (GSIA); Mr Daniel Addo, Managing Director of the Consolidated Bank Ghana (CBG); Mr Osei Gyasi, Head of Banking Supervision at the Bank of Ghana (BoG); and Mr Paul Ababio of the Securities and Exchange Commission (SEC).