Investors get landmark judgment against stock exchange

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The Nigerian Stock Exchange (NSE) may have a radical shift in its information release process if a recent Federal High Court ruling is to be complied with.
According to information made available to National Daily by the plaintiff, Dr. Ayibatonye Owei and his 4 children lost a significant sum to an unregistered investment product, Partnership Securities Deposit Account (PSDA), which was promoted by the Partnership Investment Company Limited and Partnership Securities Limited (the Partnership Entities).
In order to fully understand the nature and extent of the rights/reliefs of the Plaintiffs vis-à-vis the liability of the Partnership Entities, the Plaintiffs had, relying on the FOI Act, requested for certain information/documents, relating to the affairs of the relevant Partnership Entity from the Nigerian Stock Exchange (the NSE).
However, the NSE refused the Plaintiffs’ request for information on the grounds that the NSE is not subject to the FOI Act and therefore not under any obligation to honour the Plaintiffs’ request for information.
 
In its Judgement, the Federal High Court declared that the NSE is a ‘public institution’ within the contemplation of the FOI Act. On the basis of the affidavit evidence before it, the court also reasoned that it is in the interest of the public to disclose the affairs of an entity that has done business with the public and is alleged to have acted against the interest of the public.
 
The court also found that the Defendants (the NSE) could not legitimately enjoy the protection of section 14 of the FOI Act, and that the ‘public interest’, in the instant matter, far outweighs the interests of the clients of the Partnership Entities.
 
 The court consequently ordered the NSE to deliver requested documents to the Plaintiffs within 7 days. With this judgement, the NSE and other securities exchanges operating in Nigeria’s capital market must now comply fully with the obligations placed on public institutions under the FOI Act. The NSE has complied with the aforesaid order of the court.
 
This court judgement has consequences of mega proportions and if it stands, could significantly affect the operations of the Nigerian Stock Exchange.
 
Recall that last year, the Nigerian capital market was rocked with a scandal. A stockbroker, Mr. Victor Ogiemwonyi was arraigned before a Federal High Court sitting in Lagos and remanded in Ikoyi prison.
 
Mr. Ogiemwonyi is the founder and MD of Partnership Securities Limited, a stockbroking firm on the Nigerian Stock Exchange that was accused of fraudulently selling shares belonging to his clients and misappropriating the proceeds. The amount involved in the alleged fraud is about N1, 237,245,000 and US$80,000.
 
 National Daily also gathered that the ruling could handover unexpected power to retail and institutional investors who are looking for more disclosure from the Nigerian Stock Exchange.
 
The Nigerian Stock Exchange currently makes information such as press releases, company results, investor presentations, stock prices and valuations, publicly free on its websites.
However, critical information is offered at a cost often too steep for retail investors, but within the reach of stockbrokers and research organisations. With this judgement, proprietary data could become free if investors force the hand of the Exchange via the FOI.
 
Analysts, who spoke to National Daily, also fear that civil society activists could use the ruling as an opportunity to beam the searchlight on public office holders or conduct witch hunts.

Investigations relating to previous corruption cases in the country have revealed that some elected officials have shareholdings in listed companies, with some acquired while in office.

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