- EFCC Probes 35 Capital Market Fraud Cases
The Economic and Financial Crimes Commission (EFCC) is investigating about 35 fraud cases at the capital market.
Sources confirmed at the weekend that the EFCC and the market regulators, especially Nigerian Stock Exchange (NSE), have stepped up collaboration on prevention of corrupt practices and market abuses with the NSE referring more cases to the anti-graft agency for investigation and prosecution.
A source indicated that the NSE recently suspended a retail stockbroking firm as part of a joint collaboration with the EFCC which had launched investigation into the activities of the firm for allegedly engaging in fraud.
Although the details of the cases could not be disclosed due to legal confidentiality and ongoing investigations, a review of the preliminary findings indicated that most cases relate to fraudulent sale of clients’ shares and diversion of clients’ funds, impersonation and false representation of products and services.
Already, EFCC has about five cases in court, in collaboration with capital market authorities. The agency prosecuted a case that led to a seven-year jail sentence and forfeiture of assets of a former managing director of a stockbroking firm.
The EFCC and capital market regulators operate a two-pronged strategy involving restitution and prosecution to secure restoration for investor and deter corrupt practices through criminal prosecution and recovery of illegal proceeds.
The NSE, through its Disciplinary Committee and Securities and Exchange Commission (SEC), through its Administrative Proceedings Committee (APC), run active investigative mechanism that seeks to uncover malpractices, sanctions indicted operators and restitutes affected investors. However, both NSE and SEC lack prosecutorial powers.
Capital market authorities had bridged the gap between their investigative powers and prosecutorial powers through Memorandum of Understanding (MoU) with the EFCC, which allows the organisations to collaborate on information sharing, investigation, prosecution and enforcement.
Checks revealed that there has been more than 100 per cent increase in capital market cases under investigation by the EFCC after last year’s meeting between the Acting Chairman of EFCC, Mr. Ibrahim Magu and Chief Executive Officer, NSE, Mr. Oscar Onyema and other top executives and stakeholders at the stock market.
SEC and EFCC had in January last year, signed an MoU that formally established the alliance between the two Commissions. The MoU seeks to promote efficient investigation and conclusion of all cases reported by either of the institutions to each other and to promote the integrity, efficiency and soundness of the capital market and the economy in general.
It also seeks to promote collaboration in the areas of training and secondment of middle cadre officers of the SEC to the EFCC and those of the EFCC to the SEC; or in the alternative, the establishment of a liaison desk in both Institutions as well as promote collaboration in other areas beneficial to both Institutions.
According to the MoU, the institutions shall provide each other with the utmost mutual assistance in any matter falling within their competences, including in particular the following areas: secondment of middle cadre officers, training to enhance the investigative skills and capacity of personnel of the institutions and consequently increase the general output and performance of the institutions and facilitate better understanding of each other’s functions through capacity building programmes and human capital development in the areas of investigation of fraud in the capital market.
The institutions will also collaborate in the areas of exchange of information to assist the performance of the institutions’ respective functions, reporting, investigation and prosecution of fraudulent and manipulative practices in the Nigerian capital market and any other activity as agreed between the institutions from time to time.
