A total of 379 investors, who lost N1.69bn on the Nigerian Stock Exchange, have sought claims from the Investor Protection Fund, data provided by the IPF Board of Trustees, show.
The IPF is a statutory fund established pursuant to Section 197 of the Investment and Securities Act to compensate investors who suffer pecuniary loss arising from the revocation or cancellation of the registration of a dealing member firm by the Securities and Exchange Commission; and the insolvency, bankruptcy or negligence of a dealing member firm of the Exchange.
It is also aimed at compensating investors who suffer losses arising from “defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the dealing member firm in the course of its business as a dealing member firm”.
The IPF board had set a maximum compensation of N400,000 per claimant.
The Board had disclosed on Monday that it had approved the payment of claims to 154 claimants out of which 23 had been paid a total sum of N7.2m with the remaining 131 processing their payment.
The Vice-President, IPF Board of Trustees, Mr. Fubara Anga, had said that the total amount to be paid to the 154 claimants whose identities had been verified by identity verification consultants was N40.6m.
Additional data provided by the board following the briefing it held on Monday put the number of claimants verified by it at 379 with the actual value of loss of the 379 claimants at N1.694bn.
It said that of the 379, claimants verified by identity consultants and approved for payment by the was154.
Out of the 154, the IPF Board said those that would be paid full value of the loss of their investment were 81, while 73 would receive below the total loss of their investment.
The board put the total number of the 154 claimants that would receive exactly N400,000 at 78, adding that the highest claim before the IPF was N185m and the lowest was N1,400.
Some have, however, questioned why the maximum compensation was pegged at N400,000 when there are investors who have lost millions due to the reasons the IPF was established.
For instance, if all 379 claimants verified by the IPF Board were paid the maximum compensation of N400,000, they would get a total of N151.6m whereas the lost N1.69bn.
The board, however, explained that the objective was to compensate investors for their losses and not to replace the lost investment.
The Chief Executive Officer of the Nigerian Stock Exchange, Mr. Oscar Onyema, who is a member of the IPF Board, explained that most of the bodies like the IPF didn’t set out to ensure complete restoration of what was lost.
He said, “What they do is that they give you a stated maximum. Just to help soothe some of the pain. So, we go through the dispute resolution mechanism to help recover all the assets. When that fails that is when you can now come to the IPF,” he said, adding that the net asset of the IPF was about N872m.
Anga explained that the fund was not an exhaustive avenue for getting reprieve for losses.
He added, “What you find is that many investors who have lost money actually fall below that (N400,000) threshold. But we also have several investors who have lost a lot of money. The fund can in no way compensate them fully for their losses.”
He said what such investors could do was to explore all the other dispute resolution mechanism and even legal options within the industry – from the Federal High Court to the Investment and Securities Tribunal to the Administrative Proceedings Committee as the Securities and Exchange Commission.
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Source : Punch