The panel’s recommendations were accepted by the government and formed the basis of the enactment of the Investments and Securities Decree No. 45 1999 by the regime of General Abdulsalam Abubakar. To address the criticism of the lack of statutory basis for the AHC under the new ISA 99, SEC was given the power to appoint Committees to carry out functions on its behalf.
It is by virtue of this provision that SEC was able to set up the Administrative Proceedings Committee (APC) which looks into allegations of market fraud, abuse or violation of provisions of the ISA (in fact, it is the internal administrative trial wing of SEC). SEC is required by Section 29(7) of ISA 99 to give an alleged violator an opportunity of fair hearing through APC proceedings.
To address the issue of the unconstitutionality of appeals lying to the Minister, and thus strengthen administrative due process, the new law created the Investments and Securities Tribunal (IST) and provided that the decisions of SEC or any of its Committees, including the APC, would be appealable to the IST and not to the Minister.
Thus, though SEC still has legislative, executive and judicial powers, its decisions were now subjected to review by the Tribunal and not the Minister, as was the case under the 1990 Act. Furthermore, the absurdity seen in the Owena Bank case discussed above, on the time limitation of twelve months within which SEC could suspend a defaulter was done away with by deletion of the time limit.
However, as progressive as the above measures were, from the point of view of effective powers, which would be necessary in order to preserve the integrity of the capital market, there still remained a lacuna arising from the absence of a power of SEC to take over the management of erring companies where public interest demands, as is the case with other similar agencies such as the National Insurance Commission (NAICOM), and the Central Bank of Nigeria (CBN).
This lacuna was often exploited by market participants, as appeared to be the case in Baico Plc v IMB & ors. While the exigency of time would not permit discussion of the full facts of that case, permit me to remark happily that the clock now appears to have come full circle with the provision under the Investments and Securities Act 2007 of the power by SEC to intervene in the management and control of capital market operators which it considers has failed, is failing or in crisis and doing whatever the Commission deems necessary for the protection of investors.
This power is further expounded upon in Sections 48 to 50 of the 2007 Act. Under these provisions, where, after an examination of a capital market operator, SEC is satisfied that an operator is in a grave situation, SEC may, in addition to, or as an alternative to other sanctions, assume control of the business of the operator until it is satisfied that provision has been made for the repayment of the investor or, in its opinion, it is no longer necessary for it to remain in control of the operator.
DISPUTE RESOLUTION IN THE CAPITAL MARKET: APC AND IST. As stated above, one of the positive innovations of the ISA 99 was the establishment of the Investments and Securities Tribunal (IST), partly as an answer to the natural justice criticism made of the situation under the SEC Act 1988. The relevant provisions in this regard were in Part XIV of the Act, which is on the establishment, juris-diction, authority and procedure of the Investments and Securities Tribunal.
The IST was empowered to make rules guiding its practice and procedure. Essentially, any person aggrieved by the decision of SEC may institute an action in the Tribunal or appeal against such decision within a period of 30 days from the date of the decision. A person dissatisfied with a decision of the Tribunal may then appeal on points of law to the Court of Appeal within 30 days after the date on which the decision is given. Prior to the constitution of the Tribunal, investment and securities cases were being tried before the Federal High Court, using the traditional adversarial system.
However, the Tribunal was established as a shift from the traditional system to a more flexible, time responsive alternative dispute settlement system that is in conformity with international best practices of providing independent and dedicated courts for specialized and technical matters, as are dealings in the capital market. This concept, though novel here, is not peculiar to Nigeria. For instance, in the UK, there is the Financial Services and Markets Tribunal (FSMT), while in India, there is the Securities Appellate Tribunal (SAT).
The nature of operations and transactions in the capital market is highly technical and, thus, requires well-trained hands that are specialized in this respect. As a result, experts in both legal matters and market operations man the Tribunal. In addition to these, the IST has a crop of seasoned professionals with diversified legal and technical operations experience in capital market staffing its Legal Services as well as Technical Operations Departments.
The Tribunal is empowered under Section 234 of the ISA 1999 to adjudicate on civil disputes and controversies arising under the ISA and particularly on matters relating to: (a) interpretation of any law, enactment or regulation to which the Act applies; (b) disputes between: - the Commission and any Sores in the capital market; capital market operators and SROs; capital market operators; capital market operators and investors; quoted companies and the regulators or SROs, inter alia. For jurisdictional clarity, the Tribunal has no power to adjudicate on criminal matters.
This jurisdiction resides in the Federal High Court. (See section 235 of the Act). Since inception, the IST has resolved a number of cases and appeals. Through those decisions, one could deduce certain principles which are relevant to support the operation of the capital market. Because of exigency of time, we would comment on a few of those cases and highlight the principles established by the Tribunal. In A.G. Olisaemeka v Securities and Exchange Commission, the Applicant was a stockbroker in the employment of Apex Securities Limited.
Following investigations into a report of large-scale fraud involving UAC shares, the firm was invited for questioning by the police. At the end of the proceedings, the Appellant was found guilty of complicity of fraudulent dealing in the capital market, and banned from doing business in the capital market by the APC of SEC.
He was also referred to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution on the UAC share scam. On appeal by the Appellant for a review of the decisions, it was affirmed by the Tribunal inter alia that SEC, as the apex regulator in the capital market, is vested with statutory authority to conduct investigation to ascertain whether there has been a violation of the ISA ‘99, and that the APC of SEC acted appropriately when it invited the parties involved in the share scam to APC in order to uncover the causes and perpetrators of the fraud.
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