SEC PRESS RELEASE

July 27, 2010

SEC Takes 260 Entities and Individuals to Court for Market Abuse

The Securities and Exchange Commission (SEC) in its avowed commitment to restore
investor confidence, enhance market integrity and protect everyday investor, is taking two
hundred and sixty (260) entities and individuals to the Investments and Securities Tribunal
(IST) for alleged violation of the Investments and Securities Act (ISA), 2007.

These entities and individuals including banks and other capital market operators are
alleged to have been involved in price fixing, share price manipulation, fraud, and
insider trading. These activities are contrary to the provisions of the Act.

The ISA 2007 prohibits the employment of any device, scheme or artifice that would
operate as a fraud or deceit on any person in connection with the purchase or sale of
securities. Many of the respondents were alledgedly engaged in such deceptive and
manipulative activities.

Several entities and individuals that are being proceeded against have allegedly engaged
in false trading which is prohibited by the ISA. False trading is where an individual or
entity engages in activities that may create a false or misleading appearance of activity in
any securities.

Another alleged violation by these entities and individuals was the purchase or sale of
securities that did not involve a change in the beneficial ownership of the securities and
transactions conducted to maintain, inflate, depress or fluctuate the price of a security.

Actions were also filed against some individuals who were alleged to have engaged in
insider trading by using unpublished price sensitive information in relation to purchase or
sale of securities.

The Commission is seeking injunctions, monetary penalties and the disgorgement of profits
gained in violation of the ISA. The Commission appreciates the cooperation of all who aided
the investigation and particularly the assistance of the Central Bank of Nigeria (CBN) and
the Nigeria Deposit Insurance Corporation (NDIC). The benefits of collaborating have meant
that the Commission was able to achieve much more with the very little resources that it
had. Between the SEC and its partners we want to ensure that regulation and enforcement
have a crowding out effect on criminal activites in the capital market.

Finally the Commission would like to emphasize that a credible enforcement programme is a
key component for ensuring the fulfillment of its critical mandate of protecting the everyday
investors in the Nigerian capital market.

Lanre OLOYI
Assistant Director/ Head Media
Securities and Exchange Commission (SEC)
27/07/2010.

PROSHARE COMMENT: CAVEAT EMPTOR IN THE MARKET:

This news came in at 22.15pm today; some four weeks after the SEC had moved against
some 36 stockbrokers. It is instructive to note that the SEC has refused to provide the
names of these individuals which we intend to source directly from the ISA tribunal as part
of our effort to keep the public dully informed. We therefore issue a CAVEAT EMPTOR on
those firms which have had a history of infractions, some of which are notable names and
for which there have been a long list of pending cases outstanding against them at the SEC,
some of which dating back to 2007.

We await SEC’s list of firms involved in the infractions noted here and placed before a public
court.

Kindly visit our site to read our expose on quoted firms and the games played to the
detriment on investors which will be launched on Friday this week.

For enquiries, kindly contact us at info@proshareng.com

Additional Insight:

Exclusive jurisdiction of the Investment and Securities Tribunal

Ajayi v. Securities and Exchange Commission (2009) 13 NWLR (Pt. 1157) 1

Thursday, 11 March 2010 01:10
By: Ayokunle Ogundipe

A decision of the Court Of Appeal affirming the exclusive jurisdiction of the Investment and
Securities Tribunal in disputes arising under the Investment and Securities Act

Specialized courts” although somewhat novel in Nigeria are not entirely so on the global
landscape. Their evolution is owed largely to the exigencies of modern business which
demand flexibility, speed and cost-effectiveness in the formal adjudicatory process. In some
ways comparable to foreign tribunals such as the United Kingdom’s Financial Services and
Markets Tribunal, although perhaps not as widely acknowledged is the Nigerian Investment
and Securities Tribunal (IST).

The IST is responsible for the resolution of all disputes arising out of the application and
enforcement of the Investment and Securities Act 2007 (ISA 2007) and appeals from its
decisions lie directly to the Court of Appeal. An award or judgment of the IST upon
registration with the Chief Registrar of the Federal High Court shall be enforced as though it
were a decision of the Federal High Court. This is however not indicative of a shared
jurisdiction between the two courts in disputes relating to or arising from the operation of
the IST 2007, as the Court of Appeal hastened to restate in the case under review.

The Facts:
The appellant was the former Finance and Accounts Manager of African Petroleum Plc (AP
Plc) until his retirement in 2001. Sometime in May 2004, the appellant became aware that
the Administrative Proceedings Committee (APC) of the respondent had found him culpable
as one of those who authorized the issue of his former company’s prospectus in 2000, which
was later found to have contained incorrect statements.

The appellant further discovered that the committee’s findings were potentially injurious to
his career as a chartered accountant and in addition, exposed him to criminal prosecution.
The appellant felt aggrieved more so as he claimed he was not one of those who authorized
the issue of the said prospectus. He was never served with a hearing notice of the allegation
against him, nor was he afforded the opportunity of making any representation to the
committee before the decision was reached.

The appellant accordingly filed a motion ex parte at the Federal High Court, Abuja seeking
leave to apply for judicial review of the respondent’s decision. Leave was granted and
subsequently the appellant filed a motion on notice seeking inter alia for an order of
Certiorari. Certiorari is a remedy in administrative law that seeks, as in this case, an order
to remove the decision of the respondent into the Federal High Court for the purpose of
quashing same.

The trial court after hearing arguments from both parties declined jurisdiction to entertain
the suit and accordingly transferred it to the Investments & Securities Tribunal (IST)
pursuant to its powers conferred by virtue of Section 22 of the Federal High Court Act Cap F
12 Laws of the Federation of Nigeria (LFN) 2004. Aggrieved, the appellant appealed to the
Court of Appeal.

The Issues for Determination and Judgment:

The appellant contended on appeal that the Federal High Court had jurisdiction to entertain
its complaint being a complaint against an Administrative Tribunal. The respondent on the
other hand raised a preliminary objection on the grounds that by virtue of Section 22 (4) of
the Federal High Court Act, the decision by the Federal High Court to transfer the suit could
not be appealed against to the Court of Appeal.

The appellate court adopted the following issues for determination as raised by the
Appellant; Whether the Federal High Court was right in law when it held that the ISA
confers exclusive jurisdiction on the IST in respect of matters relating to the operations of
the Investment and Securities Act 2007.

Whether the Federal High Court ought to have quashed the decision of the Administrative
Proceedings Committee of the respondent complained about by the appellant on the
grounds that the committee’s proceedings were conducted in violation of the rules of natural
justice.

In arriving at its decision unanimously dismissing the appeal, the Court interpreted the
provision of Section 22 of the Federal High Court Act alongside Section 241 (1)(a) of the
Constitution of the Federal Republic of Nigeria 1999 (CFRN 1999). Having regard to the
superior status of the latter, it found that notwithstanding the provision of the ISA, the
decision upon which the appeal was based was a final one and therefore appealable as of
right according to the CFRN 1999. The respondent’s preliminary objection was therefore
dismissed.

The Court of Appeal however further found that before a court is competent to adjudicate,
the subject matter of the case must be within its jurisdiction and must come to the court by
due process of law and on fulfilling any conditions precedent. In this case, upon a combined
reading of sections 224 (1), 234 (1), & 236 (1) of the Investment and Securities Act Cap I
24 Laws of the Federation of Nigeria (LFN) 2004, the proper forum was found to be the IST
which the court held, disqualified the Federal High Court from exercising jurisdiction.

On the second question, the court considered whether in administrative law, it was
permissible under any circumstance, for a tribunal to conduct proceedings in the absence of
the party in question and find him culpable without hearing his side of the story contrary to
the rules of natural justice.

Following the precedent established in the case of Falomo v. Lagos State Public Service
Commission (1977) NSCC 230 per Idigbe JSC, the court held that where a statutory
provision excludes the need for prior hearing but provides for an administrative appeal or
judicial review on the merits of the decision of that body, the duty to apply the audi alteram
partem rule (that is, the rule that requires the other side be heard in any adjudicatory
process) in its proceedings becomes waived.

Citing the case of Itseghosimhe v Ogbeta (2001) 13 NWLR (Pt. 729) 26 at 36 in support and
having found that the trial court had not erred in principle and had, in fact, acted
appropriately within the provisions of the necessary laws, the court held that the trial court
indeed lacked the competence to quash the decision of the Administrative Proceedings
Committee of the respondent. The entire appeal was accordingly dismissed and the decision
of the trial court affirmed.

Comment:
Ordinarily, where a judicial or quasi-judicial body disregards the principles of natural justice,
the courts will intervene to protect the aggrieved party and an application for any of the
prerogative orders of Mandamus, Certiorari and Prohibition will ordinarily not be treated
lightly by any court of law. They are discretionary common law remedies which the High
Courts may grant in exercise of their supervisory jurisdiction over inferior courts, tribunals
and administrative bodies.

However, where a statute provides for a means of seeking redress in relation to disputes of
a specific nature, the courts in their wisdom would be unwilling to act otherwise. This is not
a denial of fair hearing nor does it trivialize the constitutionally guaranteed rights of the
individual in question. However, specialized courts/tribunals such as the IST are established
bearing in mind the peculiarities of the various sectors over which they adjudicate. As such,
the rigid posture of the courts to decline entertaining such actions will only help to further
strengthen and develop their growth and acceptance to the extent experienced in more
developed nations. This will ultimately step up the pace of doing business in Nigeria.

*Ayokunle Ogundipe is an Associate in the commercial law firm of Perchstone & Graeys