Row over Access Bank Offer

The Securities and Exchange Commission launches an investigation into the technical suspension imposed by the Nigerian Stock Exchange on Access Bank shares, amidst reactions by stakeholders



The confusion generated by the actions of the Securities and Exchange Commission, SEC, and the Nigerian Stock Exchange, NSE, over the shares of Access Bank may take a toll on investors. The fear, especially among investors, is that the feud between the regulators can erode the confidence of shareholders of the financial institution and other companies that are listed on the floor of the stock exchange.

Recently SEC commenced investigation into the circumstances surrounding the technical suspension imposed by NSE on the shares of Access Bank as no such suspension was placed on the shares of other listed companies that raise capital from the stock exchange. While the management of the stock exchange placed Access Bank’s shares on technical suspension ahead of its N64 billion right issue, the apex regulator argued that it had issued a directive five years ago that no listed company should have its share price frozen for reasons of fund raising.

But, this operational lapse is not a good music to the ears of some stakeholders in the capital market. They argue that while the SEC’s move might signal the desire of the apex regulator to ensure the practice of placing securities of listed companies on technical suspension during capital raising exercises, it is no longer acceptable as it is not best practice. Making the information public as done by SEC is counter-productive, according experts. Their position is that both regulators should be cautious in carrying out their regulatory functions in order to prevent a reoccurrence of the 2008/2009 near crash saga.

The fears of stakeholders are heightened, as there are allegations that the shares of the financial institution were given preferential treatment because its former managing director is now the president of the exchange’s council. Femi Jegede, an investor, described the stock market as a fragile institution driven by information (positive or negative) that both regulators ought to manage little crisis like that of the technical suspension before some detractors begin to form opinions that could pull down market indicators, which have witnessed a significant growth recently. “There are some corrections that are meant to be made behind doors. We cannot afford to return to Egypt and the way to prevent that is if they don’t wash their dirty linen in the public,” he stated.



Aside from that, Biyi Odukoya, a stockbroker, argued that SEC ought to lay more emphasise on some of its rules. His argument is that the Rule 82(c) of SEC Rules 2011 empowers the NSE to place technical suspension on companies that wants to raise additional fund. The Rule 82(c) states that the exchange is to act in the interval between the receiving of the application for the rights offer and the opening date of the offer, place the share price of the issuer on technical suspension which suspension shall be lifted after the close of the offer. But when the SEC Rules 2013 were promulgated, Rule 82(c) was removed from the new SEC Rules. According to him, this effectively left suspension of securities to the discretion of the exchange.

But an industry source disagrees with Odukoya. His argument is that the stock exchange ought to have known that this did not preclude it from making clear to the market the basis of its actions. “The regulator should ensure that investors and the public are kept fully informed of all factors which might affect their interest and in particular, that immediate disclosure is made of any information concerning their interest, which might reasonably be expected to have material effect on market activity, the prices or value of listed securities,” he stated.

Meanwhile, some operators are optimistic that the bank’s shares and the market are far too strong for such development to impact them negatively. Atiku Kafaru, managing director, Camry Securities, argues that the rebound witnessed in the market is sustainable and has come to stay. To him, such development will not have an impact on the market because he beliefs what controls demand and supply in the market is liquidity and investors’ confidence and “the investors we have in the market now are different from the ones that came in as a result of the boom recorded in 2008 when the market was at its peak.” Rather than expecting an under-subscription of the Access Bank’s right issue or a slide in market indicators, Kafaru told the magazine that he expects market indicators to rise by the end of the fourth quarter.

He also noted that though issues bordering on operational lapses have been thrown up, but it would not affect activities in the market. His words: “The market will not panic because of this. Participants and players will not react negatively because they already know the cause of market collapse. It will not affect confidence at all. The market is insulated from issues like this.”

With Kafaru’s analysis and views, it appears that the development may not lead to panic sales of shares by investors but regulators are expected to make efforts to ensure that their regulatory functions are carried out seamlessly.

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