As part of efforts by the Nigerian Stock Exchange to reinforce-protection mechanism and also to ensure that operating rules are effective to serve as deterrents to market abuse, it has started the implementation of new rules to guard against unethical practices by stock brokers.
The new newly amended rules that is aimed at tightening the noose on unauthorised sale and transfer of shares by unscrupulous stockbroking firms and traders, NSE could withdraw the dealing licence of any erring stockbroking firm and trader as well as impose fines not less than N1 million on any offender.
According to the rule, no dealing member shall sell or transfer any securities without the authorisation of the owner. “A dealing member that has sold or transferred any securities without the authorisation of the owner shall not be permitted to keep any benefits accruing from such transaction, including but not limited to bonuses, rights, commissions, cash dividends, capital appreciation, and any profit accruing therefrom whatsoever,” the rule stated.
Any dealing member that sells or transfers securities without the authorisation of the owner shall be required to buy back the securities along with any accrued benefits within 14 business days.
Besides, where the unauthorised sale transaction is worth N5 million and below in value, the erring stockbroking firm will be liable to pay a fine of N1 million or three times the value of the sale or transfer, whichever is higher, and N5, 000 for every day from the day on which the dealing member is required to buy back the securities by the Exchange until the day the dealing member completes buying back the shares for the owner.
Where the illegal sale transaction is higher than N5 million in value or the dealing member has engaged in such unauthorised sale, or transfer of securities on a previous occasion, it shall have its dealing license withdrawn by the council of the Exchange and shall in addition be liable to pay a fine of N5 million or three times the value of the sale or transfer, whichever is higher and N5,000 for every day from the day of the sanction until the day the dealing member completes buying back the shares for the owner.