Insider Dealing: N7 Billion Dumps on FCMB Stocks

In a suspected insider dealing, a certain investor or investors have been acquiring FCMB stocks since Friday.

In the last seven trading days, transactions on FCMB stocks jumped from between 3.9 million and 5 million shares per day to 932.889 million shares valued at N3.26 billion on Friday. On Monday, this number rose to 1.024 billion shares estimated at N3.687 billion to bring the total transactions on the tier II bank to N6.952 billion.

At the Nigerian Exchange Limited (NGX) on Monday, FCMB transactions accounted for about 50% of the value of the total transactions carried out at the bourse.

Investors exchange 1.280 billion shares valued at N7.919 billion on Monday, FCMB stocks accounted for 1.024 billion of the total shares traded and at least 50% of the N7.919 billion value.

FCMB is yet to disclose the purchase as mandated by the Security and Exchange Commissions (SEC). Most companies usually disclosed it a few months after the transaction took place to minimize its impact on the company. For a better understanding of insider dealing, read below.

Understanding Insider Dealing

Insider dealing is when people, who have access to certain information regarded as ‘insider information’ either via their position in the company or relationship with people working in the company, purchase a stake in the said company based on the information.

It is illegal and prohibited by the Investment & Securities Act (ISA 2007). In Section 111(I), the Act states that “a person who is an insider of a public company shall not buy or sell, or deal in the securities of the company which is offered to the public for sale or subscription if he has information which he knows is unpublished material, price-sensitive information in relation to those securities”.

This includes all the former and present staff of security exchanges and constructive insiders like investment bankers, accountants, stockbrokers and others who have access to certain confidential information while providing their services to a public traded company.

The act imposed not less than N500,000 fine or equivalent or double amount of the profit made or loss averted or imprisonment of up to 7 years in case of an individual convict and N1,000,000 fine for corporate offenders.