Share Purchase Manipulation: Tribunal Finds Ex- Union Bank MD, 4 Others Culpable
The Investment and Security Tribunal (IST) has found former Managing Director of Union Bank, Mr Bartholomew Ebong and four other directors of the bank culpable in the last stock market bubble that led to near collapse of the nation’s capital market.
Mr Ebong and four other former directors , Mr Samuel Idowu Ayininuola, Austen Obigwe, Mr Lanre Idowu and Mrs Emily Odinkanekwu, were accused of buying back Union Bank’s shares on the equity market, thereby creating artificial price increase that gave wrong impression about the stock market growth.
The IST, in a ruling on Monday, said the five former directors engaged in an improper conduct by participating in a scheme that saw Union Bank buying back its own shares directly or indirectly against the provisions of the Investments and Securities Act, 2007. IST said this act undermined the fair and orderly conduct of the securities market and breached the integrity of the market.
Further in its ruling, IST directed KPMG to carry out an investigation with a view to determining the extent of losses suffered by investors in the securities market as a result of the unlawful activities of these five directors.
It also submitted that any amount lost or the benefit received by the directors when recovered, should be deposited into an escrow account by the Securities and Exchange Commission (SEC).
Where the affected investors cannot be ascertained, IST said the money recovered should be deposited into the Investors’ Protection Fund by SEC.
The Central Bank of Nigeria (CBN) and SEC had set up a joint task force to investigate the circumstances surrounding the near collapse of the Nigerian capital market.
It was investigation by this task force that revealed that Union Bank Plc, in 2007, through its erstwhile directors, got a loan from some foreign banks and with the funds, initiated a scheme which resulted in the bank funding the purchase of its own shares.
The task force said this illegal share buy – back resulted in great losses to many investors and contributed to the near collapse of the nation’s capital market.