The Ghana Securities Industry Association (GSIA) says some of the collapsed fund managers had their funds locked up in savings and loans and microfinance companies that were placed into receivership by the Bank of Ghana.
The association, whose membership includes capital market players, in its response after the capital market regulator shut down 53 fund managers said the banking sector clean up provided the last trigger that sealed the fate of some of the affected companies.
While the Securities and Exchange Commission, which announced the mass action, said the government will make some support available to provide relief to affected customers, the Association called on the government to help retrieve locked-up funds of these fund managers in companies under receivership.
“The Ministry of Finance, SEC and Bank of Ghana must urgently support the investment industry by pushing the Receivers of failed Savings and Loans, Finance Houses and Microfinance firms to pay liabilities to Fund Management firms with validated exposures,” the association said in its statement.
According to the association, while poor governance and ethics played a part in this industry’s current challenges, the banking sector clean-up was the final trigger causing the liquidity challenges that some firms face.
“Piecemeal pay-outs for validated exposures exacerbate these liquidity challenges and given that pronouncements have been made that no depositors will lose their funds, it is important that validated claims by Fund Managers are immediately honoured,” said the association.
No need for panic withdrawals
The Association argued that there is no need for panic withdrawals by investors. It stated that there are several robust fund
management firms that are liquid and operating with healthy balance sheets and it is confident that these will continue providing solid services to the investing public.
The statement issued by the Governing Council called on SEC to provide clarity on the path forward for investors whose monies were with collapsed firms.
This, they said, will reduce investor panic and help to forestall a run on the industry.
“There must also be a clearly spelled out process for firms whose licences have been revoked and who feel they may have a genuine case for review,” the association said.
The capital market has seen an average growth – 69.5 percent per annum over the past decade and its size (Ghs 40 billion) are clear pointers to its importance to the broader economy.
And the Association argues that in order for it to continue playing its intermediation role in the economy it will need a better resourced and engaged regulator, a well-informed investing public and robust, well-governed firms that act in the interest of clients.