THE Securities and Exchange Commission(Sec) has said that it is making plans to reintroduce the recapitalization exercise for capital market operators, but would rather commence it this year.
Speaking with journalists in Lagos last week, Ms Daisy Ekineh, the acting director general of the commission said recapitalization of capital market operators was essential and would not be discarded.
According to her, the commission had rested the issue of recapitalization of stockbroking housed last year but is already working on it so as to implement it this year. She noted that the commission is currently working with operators in the market on the details of the recapitalisation.
She further explained  that in the course of its newly introduced and intensified on and off site inspections of market operators and introduction of new rules and directives to operators, it discovered that a number of the operators have lost a substantial chunk of capital while others showed large negative shareholders’ funds.
She said this informed the commission’s decision to reintroduce the recapitalisation exercise which was suspended a couple of months ago, backing it with risk based capital adequacy standards and risk based supervision.
She said, “The commission in 2009 focused its priorities on monitoring and enforcement to ensure a safer, more transparent and efficient capital market. To achieve this, the commission intensified efforts to improve the efficiency of market regulation and supervision as laws and rules are as efficient as their enforcement.
Noting that more inspections are now conducted than were previously carried out in order to closely monitor the health and operations of intermediaries, she said, “following the inspection findings, all operators were directed to make full and immediate provisions for their impaired capital to be reflected in the October 2009 management accounts to the commission.
“The operators have largely compiled with the directive which showed large negative shareholders’ funds in some cases. Given the findings, the Commission held a meeting with the operators on the imperative of reopening the recapitalization and consolidation exercise which was suspended and to sensitise them on the imperative for it under the present circumstance.
 “Recapitalisation is to be backed by risk based capital adequacy standards and risk based supervision which the Commission is migrating to. The objective is to create stronger institutions which would effectively and efficiently intermediate in the capital market,” she said.
Ekineh also announced the commission’s plans to name individuals or firms engaged in infractions in the capital market and ensure that the full weight of the law is brought to bear on any culprit. She said naming and metting out sanctions to perpetrators will help address the issue of fraudulent practices in the market and serve as a deterrent to transgressions.