Shareholders Task SEC on Mutual Funds Regulation To Boost Investor Confidence

Some shareholder groups on Wednesday called on the Securities and Exchange Commission (SEC) to ensure strict regulation of the Collective Investment Schemes (CIS) operating in the nation’s capital market.

They told the News Agency of Nigeria (NAN) in separate interviews in Lagos that the regulation was imperative to protect investors’ interest.
CIS is an investment scheme that involves collecting money from different investors and then combining all the money collected to fund investment.
It is also referred to as mutual funds.

Mr Godwin Anono, Chairman, Nigeria Professional Shareholders Association, said that the commission should ensure prompt release of information by CIS promoters to the unit holders.

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Anono said that dearth of information was affecting the growth of the investment scheme in the Nigerian capital market.
He said that investors had lost interest in mutual funds due to lack of information, noting that most of them had not declared any dividend for years now.
“Unit holders don’t know what they are doing, they just collect our money and after that no information or annual general meeting,’’ Anono said.

He said that the market would not move forward with such an attitude, adding that SEC should suspend companies that failed to release information at the appropriate time.
The shareholder activist said that investors would rather invest in equities they would monitor on daily basis.
Mr Boniface Okezie, President, Progressive Shareholders Association of Nigeria, called for public enlightenment programmes on the funds rudiments for proper understanding and enhanced patronage.

Okezie said that there was need for further investment education because investors would only invest in what they know.
“Enlightenment campaigns will enable investors to know what to expect in the form of benefits accruable to such investments in the long run,’’ he said.
Okezie said that investors had lost confidence in the market due to government policies that affected minority investors in the past.
He said that unfriendly government policies had led to investors losing confidence in the stock market occasioned by banks nationalisation.

“People have been forced to forfeit their investments and such people need to be encouraged for them to get back to the market,’’ he said.
He said that market regulators and operators had not done enough in educating investors on the advantages of investing through the scheme.
But Mr Adebayo Adeleke, National Secretary, Independent Shareholders Association of Nigeria, had recently told NAN that the investment scheme was elitist and lacked grassroots appeal.
Adeleke said that the promoters had not done much in terms of confidence building and market penetration.

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“The level of mass awareness of the scheme is low and public education about such a platform is shallow,’’ he said.
According to him, the forced collective investment schemes like pension fund managers are doing well because it is compelled by law and corporate managers are ensuring compliance.
Adeleke added that investors were wary of huge overhead of managers of such fund borne by their investment.