THE current bribery scandal between the Securities and Exchange Commission (SEC) and the House of Representatives' Committee on the Capital Market has tended to subsume, even undermine basic issues troubling the sector, particularly the need to restore public confidence in stock market investment. But the problems will not go away on account of the scandal. Indeed, just before the House investigation, the Director-General of SEC, Arunmah Oteh, speaking in far away Kenya at the 28th meeting of the International Organisation of Securities Commission-Africa and Middle East Regional Committee (IOSCO-AMERC), disclosed that the SEC has referred nine capital market operators to the Police and other two to the Economic and Financial Crimes Commission (EFCC) for prosecution over alleged criminal transactions.In her country report, she disclosed, inter alia, that 28 operators were declared illegal and SEC and the Central Bank of Nigeria directed to take custody of their bank balances with a view to settling depositors. Two, a total of 1,393 complaints (752 in 2011 and 664 brought forward from 2010) were received; about 50% were resolved and closed while 156 are currently in 'enforcement action' and over 500 cases remained outstanding as at December 31, 2011. Furthermore, the report said that 20 operators were suspended from the market for various misconducts that included unauthorised sale of shares, non-payment of proceeds of sale, non-licensing as a dealing member of the Nigerian Stock Exchange and non-payment of dividend bonuses among other lapses. These actions, according to her, are part of efforts to reform the market.It is a reflection of the inadequacy of SEC's efforts that Nigerian investors at the Stock Market have not felt a momentum of these touted reforms. Added to the cynicism attending to the management of the capital market highlighted by tales of dictatorial practices and management by only the so-called expatriate Nigerians and ad-hoc committees, Nigerians are yet to return to the stock market. That is the purported reason for the current legislative hearing that has turned out to be perhaps a charade. Whereas it is in the nature of markets to move northwards or southwards, the exceptional trends of the Nigerian capital market to operate at extremes of boom and bust, as it seems, call for enlightened introspection. What we have so far has fallen far below the standards that will trigger recovery which phenomenon most other jurisdictions have begun to witness.When the upsurge in the number of operators was glibly ascribed to the increased volume of trading in the boom of 2008, the traces to many factors were benignly ignored chiefly, the greed of the market funnelled by the greed of a fraction of operators and the negligence of regulators. It is doubtful if SEC has commissioned or published its judgement of those years.Yet, for many, a case study of excess capital at banks seeking higher investment returns outlets ranks high with the flawed recruitment and admission process for market operators and stockbrokers in accounting for the denouement of the Nigeria Stock market. As a result of these incidents, there was a massive entry into the market which eventually degenerated into its infiltration by less fit and proper persons whose motivation was anathema to the market.The anticipated role of the Nigerian capital market in the development of the economy cannot be overemphasised particularly its expected role to achieve the long term finance and remnant of the Vision 20:2020. There is need for the market regulators to critically examine and review the benchmark of the operations of the market in line with best practices; and operators made to adhere strictly to them. To this end, regular examination of the activities of the market operators should be carried out and published for the investing public. This will help to curtail the sharp practices in the system.The commission should review the entry conditions for new operators into the market to ensure that operators with sound pedigree are given licences. Although the upward review of the capital base of operators has partly addressed this, other strict conditions are needed. As SEC deals with its own inflicted credibility hiatus, its record in trashing infractions in the market in the past years is woeful. Compare with the model New York market where Mr. Madoff's Ponzi scheme was investigated, he was prosecuted and jailed all within six months. Nigerians cannot wait for the commission running around with the Investment and Securities Tribunal, the Police, the EFCC, etc in a familiar but cynical motion. SEC should sit up and demand speedy resolution of all outstanding cases.The leadership of the SEC must concentrate on actual, verifiable progress that is measurable by the resolution of outstanding issues of sanctions and punishment. The lessons, severe, painful and regrettable as they may turn out, ought to be loud and clear both as a deterrent and a historic turn. It is doubtful that all the photo opportunities and seminars' announcements at these far away conferences are good alternatives. At best, they are measures aimed at polishing the sector's rickety image. What is required is an effectual reform programme, and it is imperative that the regulators, operators and macro-economic managers should reverse the all-motion and no-movement index of the stock market.
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