There are nine deregistered stockbrokers in Nigeria according to the Security and Exchange Commission. When a stockbroker is deregistered, investors have to steer clear of doing any form of business with them.
What is a deregistered stockbroker?
A deregistered stockbroker is a company that is prohibited from buying and selling stocks and other securities for clients in the financial markets in order to protect investors and maintain the integrity of the financial system.
When a stockbroker is “deregistered,” it means that they have had their registration or license to operate as a stockbroker revoked by the SEC in the case of Nigeria.
Stockbrokers are placed on standards, rules, and ethical guidelines while conducting their business activities in the financial markets.
Getting evidence of registration with the Corporate Affairs Commission (CAC) isn’t enough to get a license to operate in the financial market. Their activities are closely monitored by and regulated by financial regulatory bodies in order to ensure they adhere to the set standards.
NOTE: Deregistered firms were once active stockbrokers in the financial market before they were kicked out for violations.
Deregistered Stockbrokers in Nigeria
The last check by InfomediaNG on the Nigerian Exchange (August 28, 2023) showed that seven stock brokerage firms had their operating license revoked and were kicked out of the financial market.
The affected companies are:
- BGL Securities Limited
- Decanon Investment Limited
- LMB Stockbrokers Limited
- MACT Securities Limited
- MBL Financial Services Limited
- Monument Securities & Finance Limited
- Partnership Securities Limited
- Platinum Capital Limited
- Securities Solutions Limited
Why the operating license of a stockbroker may be revoked
The reasons for deregistration can vary and might include any of the following:
Regulatory violations:
If a stockbroker engages in activities that violate the rules and regulations by the regulatory authority, their operating license may be revoked.
Some of the violations include fraudulent practices, insider trading, market manipulation, and other unethical behavior.
Failure to meet requirements:
If after registration, stockbrokers fail to continually meet certain financial and professional standards, they will be deregistered.
Bankruptcy:
Another cogent reason why a stockbroker may be deregistered is if the stock brokerage firm becomes financially insolvent or goes bankrupt, their ability to fulfil their obligations to clients and maintain the required financial stability might be compromised and will lead to deregistration.
Criminal convictions:
Serious criminal convictions can lead to the deregistration of a stockbroker, especially if the conviction involves financial crimes or acts that undermine the integrity of the financial markets.
Failure to renew license:
If stockbrokers fail to periodically renew their licenses and meet continuing education requirements, their registration could be revoked and kicked out of the financial market.
Professional misconduct:
Instances of unethical conduct or professional misconduct, even if not illegal, can still lead to deregistration if they damage the reputation and trustworthiness of the stockbroker and could lead to being deregistered from operating in the financial market.
Conclusion:
In many cases, a deregistered stockbroker might also face legal consequences and be prohibited from working in the financial industry in the future.
The deregistered stockbrokers in Nigeria are prohibited from acting as a link between investors and the financial market.