Investor Protection Fund to compensate share fraud victims
The Investor Protection Fund (IPF) of the Nigerian Stock Exchange (NSE) may disburse as much as N130 million as compensations to investors who were victims of fraudulent activities by unscrupulous stockbrokers.
The Fund has concluded arrangements to pay the first batch of compensations after its board of trustees finally agreed on operating structures and framework for the scheme.
Sources at the weekend indicated that the IPF could distribute some N130 million to investors based on the claims and the payment rules of the fund.
The Nation’s check indicated that most of the claims were referred to the IPF by the NSE. The IPF rules allow the NSE to submit complaints made to it to the IPF while investors can also directly petition the IPF.
Part XIV of the Investment and Securities Act (ISA) 2007 requires the Exchange to establish and maintain an investors protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and 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 by the dealing member firm in its course of business as a capital market operator.
NSE’s Chief Executive Officer, Mr Oscar Onyema, who is a member of the NSE IPF’s board of trustees, had said the Fund would be paying compensations to 343 investors in its maiden payment.
He confirmed that arrangements have been concluded for the payment and the beneficiary-investors are currently undergoing the process of identity verification to establish that they are the real owners of the affected shares’ accounts.
According to him, the board of the NSE IPF has already capped the maximum payment per claim at N400,000.
The Nation had exclusively reported that the maiden disbursement of Fund would happen soon.
An impeccable source had said the board of IPF was rounding off operating structures and framework for the scheme and would roll out its maiden compensation soon to announce the commencement of effective operations.
The source said after the approval of the IPF rules by the Securities and Exchange Commission (SEC), the board of trustees of IPF had gone back to the drawing board to ensure that it fashioned effective operating structure and framework that will sustain the scheme.
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