The Ghana Securities Industry Association (GSIA) wants the Securities and Exchanges Commission to provide clarity on the processes put in place for customers who invested their monies in the 53 fund management companies whose licenses had been revoked to retrieve their investments.
This, the Associations says, will help minimise the adverse impacts of low investor confidence usually associated with revocation of licenses.
In a release, the group indicated that although it welcomes mechanisms that will shore up the industry and ultimately boost investor confidence, it is was also imperative that validated claims by fund managers are settled.
The Securities and Exchange Commission (SEC) last Friday revoked the licenses of the specified companies, saying that they have largely failed to return clients’ funds which remain locked up and in a number of cases, they have even folded up their operations.
According to SEC, this action was taken in accordance with its mandate of protecting investors and the integrity of the capital market.
Banking crisis partly to blame for collapse of some fund managers
Meanwhile, the association, whose membership includes capital market players, in its response after the capital market regulator shut down 53 fund managers said the banking sector clean up provided the last trigger that worsened the case of some of the affected companies.
According to the association, while poor governance and ethics played a part in this industry’s current challenges, the banking sector clean-up was the final trigger causing the liquidity challenges that some firms face.
No need for panic withdrawals
The group argues that there are several robust fund management firms that are liquid and operating with healthy balance sheets and is confident that these will continue providing solid services to the investing public.
Financial sector reforms
The cost of the capital market clean up adds to the far-reaching effects of the banking sector reforms which saw nine local banks losing their licenses.
The Bank of Ghana banks’ clean-up was followed by the shutdown of some 386 microfinance and money lending institutions.
Subsequently, 23 non-bank financial institutions (NBFIs) made up of savings and loans companies and finance houses had their licenses also revoked over several regulatory breaches including the inability to pay customers’ deposits.
In all of these instances, a receiver was appointed by the central bank to go after the good assets of these companies and ensure the payment of customers’ funds. The government also set aside some monies to augment what will be retrieved by the receiver.