The Securities and Exchange Commission (SEC) has ordered Menzgold Ghana Limited, a gold trading company, to shut down, with immediate effect, the business of trading in gold collectibles with guaranteed returns to clients, saying it contravenes the Securities Industry Act, 2016 (Act 929).
The SEC has also directed that no new contracts should be created, and all advertising of the investment business be halted as soon as possible, a letter sighted by The Chronicle yesterday read in part.
Menzgold Ghana Limited, according to the SEC, is licensed by the Minerals Commission of Ghana to purchase gold from licensed sellers and export same.
Dated September 7, 2018 and addressed to the Chief Executive Officer (CEO) of Menzgold, Nana Appiah Mensah, the letter said investigations conducted by the SEC found that Menzgold’s gold trading business is a capital market activity, which cannot be conducted without a valid license issued by the SEC.
The SEC said that, as part of the probe, it visited the head office of Menzgold, where it held a meeting with Mr. Nana Yaw Offei, Commercial Manager, and Rev. Derek Akubia, an adviser to the CEO.
The letter said before the meeting at the head office of the company on 23rd August, 2018, further particulars on Menzgold’s operations were requested by the SEC.
But, that information does not make that aspect of Menzgold’s operations any less of an illegality under Act 929, as well as a threat to unsuspecting and uninformed investors.
“Subsequent to the visit by the SEC officials, a request for specific detailed information was made, and Menzgold has, through its lawyers, agreed to provide the necessary information requested by the SEC within fourteen days. The provision of the information, however, does not make that aspect of Menzgold’s operations any less of an illegality under Act 929, as well as a threat to unsuspecting and uninformed investors.
“Accordingly, the SEC, hereby, directs Menzgold Company Ltd to shut down immediately the business of trading in gold collectibles with guaranteed returns to clients, which constitutes, in essence, dealing in securities with neither the necessary license nor disclosures authorized by the SEC. No new contracts should be created, and all advertising of the investment business halted with immediate effect.”
The SEC’s letter to Menzgold followed one written to the Minerals Commission on September 3, 2018 to call the former to order, after a meeting had been held in August between the SEC, the Bank of Ghana, and the Minerals Commission, to discuss the operations of Menzgold.
The letter addressed to the CEO of the Minerals Commission, Mr Kwaku Addae Antwi-Boasiako, anticipated that the Minerals Commission would direct Menzgold to only purchase gold from licensed dealers and export same, because they gave them that license.
Meanwhile, Menzgold, in a statement issued minutes after the SEC’s announcement yesterday, described it as bad faith for the regulator to come public on the development.
According to Menzgold, it had availed itself to all the relevant state institutions, including the SEC, when the bank of Ghana (BoG) started warning the public not to trade gold with them, to ensure they arrived at a productive conclusion.
“This needless leak, believed to be coming from the SEC, is, to say the least, in very bad faith and distasteful, as it defeats our confidence in the body and an affront to cooperation. We totally condemn it!” Menzgold responded.