SEC to roll-out new guideline to regulate third party transactions

The Securities and Exchange Commission (SEC) is working on a draft to present new guidelines on third party and related transactions.

This, SEC believes will address the issue of misapplication and misappropriation of investments funds by fund management firms.

The third party and related transactions was the major cause of collapse of fund management firms, forcing the clean-up of the securities industry.

Addressing participants at the Tesah Capital Webinar, Deputy Director of SEC, Paul Ababio, said his outfit is has introduced conduct of business guidelines to deal with corporate governance weakness.

“What we learnt from the sector clean-up was that there was corporate governance weakness. Due to that, we have introduced conduct of business guidelines in which we require market operators to issue annual reports.

We also found that there were related transactions that were not done transparently, so we’re working on introducing investment guidelines for fund managers”, he pointed.

Meanwhile, Senior Lecturer at the University of Ghana Business School, Dr. Elikplimi Komla Agloyor, raised concerns on the need for Ghanaians to do due diligence when investing.

“Don’t chase abnormal returns. What returns will we classify abnormal, for example, 10% a month? I think it’s abnormal but currently, if you buy Treasury bill instruments, they’re going between 12 and 13%…that’s understandable, that’s not like 120% a year.

“Or if you’re doing the equity market, the average return you could get is probably 20% a year. These are returns that also compensate you for inflation. Beyond that I think you should be careful,” he added.

A board member of Tesah Capital, Dr. Justice Yankson assured investors that his outfit will exhibit compliance and prudence in its financial transactions.

“We’re going to continue to ensure that at all times, we’re compliant and we are up to date with everything that the regulator requires of us.”