Securities Commission moves to protect investors

rules will cover investor protection, insider trading, advertisements, listing requirements, accounts and financial statements, mergers and acquisitions and custodial services. The additions would tighten regulatory requirements, especially for the public firms.
It is not yet clear when the Securities Commission will start implementing the new requirements as that depends on how long it will take the Ministry of Finance to gazette them.
Mr Chinamo confirmed this when he said: “As to when the (new) rules will be enacted that will depend on the time it takes us to have them gazetted by the ministry.”
An excerpt from the draft reads: “Following the registration and/or listing of securities, companies must file annual and other periodic reports with SECZ to update information contained in the original filing.
“In addition, issuers must send required reports to requesting shareholders. The Securities Act and these rules emphasise full and timely disclosure of specific or precise information to ensure that the market can then fairly set the prices of the securities.”
The new rules come in the wake of reports that some public firms were not disclosing sufficient information in financial statements, including when the firms want to undertake capital raising initiatives. It comes as SECZ is in the process of drafting the new rules for local securities and capital markers amid strong suspicions that some underhand activities have been taking place.
Yesterday, the commission said it was investigating suspicious share price movements and three companies had reportedly fallen under the  regulator’s spotlight.
This follows allegations that the share prices of the three firms under investigation gained by more than 20 percent in December last year, but no fundamentals seemed to support the gains.
SECZ contends the behaviour of some listed firms made it difficult for investors to have exhaustive information about a company, which is critical in evaluating them for possible investment.
As a consequence, investors ended up putting their hard-earned money in financially distressed companies that run into serious problems not long after investors had invested fresh capital into them.
Mr Chinamo recently said the regulatory authority had an obligation to ensure that investors were adequately protected from unscrupulous practices by corporates.
The new disclosure rules come as the commission is also considering criminalising insider trading and would prosecute such delinquency at the earliest occurrence, as a test case to curtail the practice. The requirement comes as SECZ is continuously improving regulatory requirements to enhance confidence in local capital in the wake of irregularities in some listed firms.
Investment advisors are now required to register with the supreme securities regulatory with effect from last Thursday in a bid to protect investors from unauthorised dealers.
The directive applies to any investment specialists, including pension funds, stockbrokers, transfer secretaries, pension fund trustees and unit trust advisors, among many other stakeholders.