The SEC on Friday, November 8, 2019, revoked the licences of 53 Fund Management Companies.
Ghanaian business mogul, Nduom fights the Securities and Exchange Commission for revoking the licence of his company, here's why
The Chairman of Groupe Nduom, Dr Papa Kwesi Nduom has expressed his disappointment in the Securities and Exchange Commission (SEC) for revoking the licence of his company, the Blackshield Capital Management (formerly Gold Coast Fund Management).
In a statement, SEC said that the revocation comes after the companies failed to “return client funds which remain locked up and in a number of cases, have even folded up their operations.”
“Essentially, they have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws, rules or conditions, despite opportunities provided to them by the SEC within a reasonable period of time to resolve all regulatory breaches. The SEC has concluded after extensive engagement with these institutions that their continuous existence in the light of their conduct poses severe risks to the stability of the capital market and to the interests of investors,” the statement indicated.
This has triggered the Chairman whose company was among the 53 to speak on the matter.
He accused the regulator of peddling untruths about Blackshield in its announcement of the withdrawal of the licence of the firm, which, according to him, had undergone rebranding to introduce new investment strategies to meet the demands of the clients.
Dr Nduom in a press statement released in reaction to the cancellation of the licence pointed out that “We are disappointed that SEC would take this action without responding to the numerous requests” to streamline operations of Blackshield.
The statement further said, “SEC’s Notice No. SEC/PN/012/11/2019 regrettably includes a number of misleading and/or untrue statements, including the assertion that 99.41% of Blackshield’s funds were placed in one investment vehicle."
The businessman revealed that the firm “will continue to pursue legal action to collect funds owed in settlement of Blackshield client liabilities."
Why SEC revoked the licence of Blackshield Capital Management Limited
In explaining the reason for the revocation of the licence, SEC said Blackshield Capital Management Limited was incorporated on August 12, 1993, and was licensed by the SEC on August 12, 2013.
On July 11, 2019, the firm changed its name to Blackshield Capital Management Limited.
According to SEC, it has had a number of engagements with Blackshield, including hearings pursuant to Section 19 of Act 929 and decisions have been issued by SEC against Blackshield with directives to take steps to comply and resolve its regulatory infractions, all to no avail.
SEC explained that the specific issues that led to the revocation of Blackshield's licence included failure to honour clients’ redemption requests, placement of client funds with related parties without proper due diligence and the requisite standard of professional conduct contrary to the Commission’s Compliance Manual for Broker-Dealers, Investment Advisers and Representatives 2008.
It said according to Blackshield’s 2nd Quarter 2018 Placement Report, 99.41 per cent of its funds under management had been placed with an unregulated related entity, Ghana Growth Fund Limited (now Gold Coast Advisors Limited).
It added that Blackshield failed to adhere to voluntary payment plans agreed on at Complaints hearings contrary to the required professional and ethical conduct of the SEC Compliance Manual for Broker-Dealers, Investment Advisers and Representatives and general best international industry practice.
It said it also failed to submit statutory reports contrary to regulations, failed to pay penalties levied by the Commission and advertising of an unapproved investment product, Cardinal Master Trust in contravention of Securities Industry Act, 2016 (929) and Securities and Exchange Commission Regulations,
2003 (LI 1728).
Here's a copy of the statement from Group Nduom:
This evening, the Securities and Exchange Commission (SEC) posted a Notice of revocation of the licenses of various Fund Management Companies, including Blackshield Capital Management (Formerly Gold Coast Fund Management).
Groupe Nduom Limited, the entity representing the interests of the majority shareholders and founders of Blackshield, would like to note the following:
1.1. We are disappointed that SEC would take this action without responding to the numerous requests to,
a) assist Blackshield in retrieving funds owed by various Government of Ghana entities;
and b) review our plans to migrate customers into a private-sector solution to Blackshield’s liquidity problem.
1.2. SEC’s Notice No. SEC/PN/012/11/2019 regrettably includes a number of misleading and/or untrue statements, including the assertion that 99.41% of Blackshield’s funds were placed in one investment vehicle.
1.3. We will continue to pursue legal action to collect funds owed in settlement of Blackshield client liabilities.
1.4. In the meantime, we ask all stakeholders to remain calm as we all wait for more details from SEC on the way forward.
Papa Kwesi Nduom
Chairman and CEO Groupe Nduom
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