The Coalition of Aggrieved Customers of Collapsed Fund Management Companies has downplayed the recent announcement by the Securities and Exchange Commission that payment processes for some affected customers will begin in September 2020.
According to them, government’s intention to pay clients of the twenty-two (22) companies currently under official liquidation is not right as clients of the companies form only a small minority of the total customer base.
In a statement issued by the Securities and Exchanges Commission (SEC), the regulator explained that the Official Liquidator, the Registrar General, will communicate details of the payment process to affected clients starting in September.
But speaking to Citi Business News, Secretary of the Coalition for the aggrieved customers of the 53 collapsed fund management companies, Joseph Aryeetey, appealed to government to focus on the majority of customers as they cannot wait any longer to access their funds.
“You see, what we are saying is that, if the government intends to pay and they genuinely want to pay, they should come up with a plan on how to pay all the customers. We are not saying that they shouldn’t pay those they intend to pay. But you see, when you have a situation where Gold Coast Fund Management holds majority in all that is going on, it is just fair that their focus should be on the majority because like I am pointing out to you, those 22 companies they said they are going to pay from next month, they don’t even form more than 5% of the total customer base.”
Government to announce bailout package for clients of defunct Fund Management Companies
The Securities and Exchange Commission (SEC) over the weekend disclosed that government was set to announce a bailout package for clients of the 53 defunct Fund Management Companies (FMCs).
According to SEC, the package will be given in phases with the first phase covering clients of the twenty-two (22) companies currently under official liquidation.
The announcement came at a time the Governor of the Bank of Ghana, Dr. Ernest Addison stated that all customers of the nine collapsed banks had been paid their locked-up funds.
A statement issued by the Securities and Exchanges Commission (SEC) explained that the Official Liquidator, the Registrar General, will communicate details of the payment process to affected clients starting in September 2020.
“Prior to the Official Liquidator realising value from assets, the Government, mindful of the plight of Investors, has reiterated its commitment to a bailout package for clients of the FMCs in the form of a social intervention similar to what was done for depositors of the failed SDIs and MFIs.”
“The first phase will cover clients of the twenty-two (22) companies currently under official liquidation per Court orders, based on their validated claims. The Official Liquidator will communicate details of the payment process to affected clients starting in September. The second phase would cover clients of the remaining companies after the liquidation orders are secured,” the statement noted.
Clients of Blackshield, Firstbanc, two others not part
SEC however noted that no action could be taken for clients of Blackshield Capital Management Limited, Firstbanc Financial Services Limited, Apex Capital Partners and Ideal Capital Partners Limited since such institutions had filed applications in court to challenge the revocation of their licences by the Securities and Exchanges Commission.
“Four (4) of the fifty (50) FMCs whose licences were revoked have filed applications in Court to challenge the SEC’s decision to revoke their licences. These cases are at various stages in Court, and have resulted in a situation where no other action can be taken by the SEC or the Registrar General to proceed with official liquidation and government bailout of the clients of these four (4) FMCs until the Court decides on them,” SEC noted in a statement.
It will be recalled that the Securities and Exchange Commission, already sustained the revocation of the license of Blackshield Capital Management Limited, formerly Gold Coast Fund Management Limited following the completion of work by the Commission’s Administrative Hearings Committee.
Also, Kron Capital Limited, Kripa Capital Limited, Frontline Capital Advisors and Intermarket Asset Management Limited (formerly CDH Asset Management) have had their revocations sustained after they appeared before the Administrative Hearings Committee.
Background
The financial sector clean-up was commenced by the Akufo-Addo administration in August 2017. It led to the collapse of nine universal banks, 347 microfinance companies, 39 microcredit companies or money lenders, 15 savings and loans companies, eight finance house companies, and two non-bank financial institutions.
The Securities and Exchange Commission (SEC) in November 2019 also revoked the licenses of 53 Fund Management Companies following the companies’ failure to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”
The action was taken pursuant to Section 122 (2) (b) of the Securities Industry Act, 2019 (Act 929) which authorizes SEC to revoke the license of a market operator under some circumstances.
Included in the list of the defunct companies was Black Shield Fund Management, a subsidiary of Groupe Nduom.
SEC selected branches of Consolidated Bank of Ghana Limited (CBG) to receive claims from clients who have their funds locked up at the affected companies.
The banks were tasked to accept relevant documents for the validation of the investment claims.
