The Securities and Exchange Commission (SEC) has commenced the verification of claims of prospective beneficiaries from the National Investor Protection Fund (NIPF). SEC earmarked N5 billion as a take-off grant for the NIPF, whose board was launched late last month.
The screening exercise is expected to be concluded this month to enable payment of compensation to begin in January 2016.
The verification team, led by Mr. Abdul Zubair, a senior management member of SEC, would be looking for genuineness of the investor’s claim, willful neglect or complicity in the defalcation, compliance with the NIPF rules and the recommendable amount payable to the claimant in the light of the total claim, the maximum compensation receivable under NIPF and the available funds to the NIPF.
According to the rules of the NIPF, beneficiaries would include investors who suffer pecuniary loss due to the insolvency, bankruptcy or negligence of a capital market operator and defalcation committed by a capital market operator or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received or deemed received by the capital market operator during its business as a capital market.
However, any client who participated in the wrongful act of the capital market operator shall not benefit from the Fund while the NIPF will also not apply to losses arising from transactions not regulated by the Commission.
The NIPF covers the entire capital market activities under the regulation of SEC, a broader scope than the earlier Investor Protection Fund (IPF) of the Nigerian Stock Exchange (NSE), which covers only the operations of members of the NSE.
The NIPF will apply only to defalcations by insolvent or bankrupt capital market operators not dealing members of Securities Exchange or Capital Trade Points. In other words, the NIPF will be for compensating investors whose losses are not covered under the IPFs administered by Securities Exchanges and Capital Trade Points.
Under the NIPF, the maximum amount payable to an investor who has suffered loss shall be N200, 000 or its equivalent in form of shares and units of bonds. However, where the amount of loss is lesser, the investor shall be paid the calculated amount of loss. The maximum amount claimable under the NIPF is 50 per cent of the N400, 000 limit stipulated by the IPF of the NSE.
“Any claim prior to the incorporation of the Fund shall not be covered by the Fund,” the rules stated.
By Dike Onwuamaeze