Banji Adenusi Bisola Olusoga As part of efforts aimed at bolstering investor confidence in the Nigerian capital market, the Nigerian Securities and Exchange Commission (SEC) recently released new rules on the operation of a National Investment Protection Fund (NIPF). The SEC released the rules in exercise of its powers under section 13(k) of the Investment and Securities Act (ISA) 2007, and they are geared towards providing a baseline guarantee for compensating investors whose losses are not covered by the Investment Protection Fund (IPF) of securities exchanges and capital trade points in the country. The NIPF provides a cover for investors who suffer losses on investments arising specifically from the bankruptcy, insolvency or negligence of capital market operators (CMO), in addition to defalcations of a CMO or its officers in relation to funds or assets in its custody. The fund is, however, only applicable to transactions regulated by the SEC, while an investor who colludes with a CMO in a wrongful act is disallowed from benefiting from it. In 2013, the Nigerian Stock Exchange (NSE) set up an IPF for investors on the NSE, which provisions mirror those of the SEC in some respects.
April 22, 2015