Some shareholders on Monday queried the credibility of the Investor Protection Fund of the Nigerian Stock Exchange.
The IPF is a pool of fund being established by the NSE to provide compensation to investors caught in capital market scam or have genuine claims of losses against dealing member firms.
The claims of losses are expected to revolve around such things as insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade point.
The shareholders told the News Agency of Nigeria in Lagos that the fund was established to protect rich investors.
Sunny Nwosu, the National Coordinator, Independent Shareholders Association, said that retail investors were not aware of the fund.
Nwosu said that the shareholders’ representative on the IPF board was not appointed by the shareholders to represent their interest, but was selected by the NSE.
He said that the fund lacked credibility because nobody had benefited from it over the years.
Nwosu also said that domestic investors had suffered untold hardship between 2008 and 2010 and needed to be compensated.
Alhaji Gbadebo Olatokunbo, member, Nigeria Shareholders Solidarity Association, also said that shareholders were not involved in the establishment of the fund.
Olatokunbo said that the NSE was not interested in local investors’ protection because they failed to accommodate their inputs in the IPF rules.
“The problem with us in Nigeria is that we always ask initiators of our problems for solutions and close the doors against other stakeholders,” Olatokunbo said.
According to him, NSE needs to educate local investors on the operation of the fund and those qualified to benefit from it.
He said: “NSE did not seek our opinion before the creation of the fund.
“We are not their target because we are yet to know how we shall be protected with the fund.”
Boniface Okezie, the President, Progressive Shareholders Association of Nigeria, said that besides the constitution of the board, approval of the rules, investor education on the benefits and those eligible were necessary.
Okezie said that many investors left the market because they did not know their rights and needed to be enlightened.
He lamented the failure of the regulators to provide information until when there was a problem, adding that investors needed to be carried along by the market regulators.
NAN recalls that the NSE, on September 21, 2012, inaugurated the new board of the fund, with Gamaliel Onosode as the chairman.
Also, the Securities and Exchange Commission, in January 2014, approved the proposed rules to govern the fund.
Meanwhile, NSE, Head, Corporate Communications, Nwando Ajene, said that NSE had scheduled an investor enlightenment programme for stakeholders on the operations of the fund.
Ajene said that rules on claims percentage threshold had not been approved by the NSE.
She said that the NSE would soon launch a website where information would be shared with the various stakeholders on the fund.
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