SEC Cleans Sector; Stops Fund Managers From Illegal Investments


SEC Cleans Sector; Stops Fund Managers From Illegal Investments


The Securities and Exchange Commission (SEC) has ordered fund management companies to stop issuing fixed-term/guaranteed returns to clients.

SEC issued the order at a meeting with chief executive officers (CEOs) and board members of fund management companies in June this year.

Flouting of SEC regulations
According to the industry regulator, per its regulations, fund management companies are not supposed to issue fixed-term/guaranteed returns to clients.

Fund managers given 6-month ultimatum
Director-General of SEC, Rev Daniel Ogbarmey Tetteh indicated that the fund managers had been given a six-month window to unwind the fixed-term investments on their books and migrate their clients to other options like managed account mandates and collective investment schemes.

SEC boss replies Isaac Adongo
He described as either ignorance or plain mischief at work or both, assertions by Isaac Adongo, Member of Parliament (MP) for Bolgatanga Central, that this directive of SEC was partly to blame for the collapse of local banks in the country.

The MP noted that with over GH¢30 billion funds under management by the fund managers, the unwinding of their investments in banks has denied banks a lot of money and is partly to blame for the liquidity crisis facing banks.

But Rev Tetteh rejected the accusations of the MP, saying he appears to be deliberately misinforming the public.

What fund managers should do for clients
According to the SEC Director-General, they advised fund management companies to direct persons interested in fixed-term/guaranteed returns to banks and other specialised deposit-taking financial institutions (SDIs) and earn commissions for referring business if they didn’t have collective investment schemes they were managing or if their clients were not interested in signing on to their managed account mandates.

This is because banks and specialised deposit-taking financial institutions (SDIs) are licensed to issue fixed-term/guaranteed returns to clients.

He noted that SEC also asked fund managers to direct clients interested in fixed-term/guaranteed returns to collective investment schemes like mutual funds and unit trusts.

SEC demands reports from fund managers
Rev Tetteh noted that SEC met the fund managers over the issue and asked them to submit returns on the fixed-term investments to the commission at the end of June 2018.

SEC analysing data submitted
The data submitted is being analysed, and the regulator will also embark on an investor education campaign that will complement the efforts of the fund managers to migrate their clients from the fixed-term investments.





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