More details are coming to light of how Stanbic IBTC Bank and its subsidiary, Stanbic IBTC Stockbrokers, allegedly manipulated equities traded on the Nigerian Stock Exchange (NSE).
An impeccable source at the NSE alleged that “in most cases, if you see the shares of Nestle Foods moving up, it is Stanbic IBTC bank moving the price through its capital market arm. That is price manipulation.
Companies allegedly prefer to patronise the bank’s capital market arm because of its connections in government.
The source added: “Now power has changed at the top, and the regulators have woken up to their responsibilities to scrutinise the activities of the bank.
“We hope the regulators will beam their searchlight on price movement of equities of companies managed by the Stanbic IBTC Stockbrokers.”
“They have been making money through alleged shares manipulation. This was partly the reason the price of Nestle hit over N1,000.
“The NSE turned a blind eye to the manipulation because it is interested in operators it wants to tag as best performing stockbroking firms.
“At N1,000 per share, how many units can genuine investors buy?
“What has been happening with some of these shares is that the stockbroking firms have been selling and buying back shares of their clients to give the impression that there are activities on the shares. It is not true.
“The bank has also made funds available to its capital market subsidiary to trade on the shares of clients. If you doubt it watch where the share prices of the stocks under its portfolio will be in few weeks from now.”
IBTC Stockbrokers Managing Director and Chief Executive Officer, Adewale Sotubo denied the allegations when he was contacted.
“IBTC Stockbrokers has never engaged and will never engage in any price manipulation on any stock on the NSE.
“We adhere strictly to the dealing rules and regulations of the Exchange and has been adjudged as a best brokerage firm in Nigeria by the Exchange in the last three years.
“This is confirmed by the award of the prestigious CEOs award of the NSE. You are please requested to check this allegation with the NSE,” said IBTC Stockbrokers.
NSE Head of Corporate Communications, Olumide Orojimi, could not be reached for comment as he did not pick calls to his telephone.
Nonetheless, investigation showed alleged improper movement in the share price of Nestle Foods. The stock had never gone below N850 per share until last week when the regulators clamped down on the bank.
Now the share price has fallen to about N700 per share after the authorities zeroed in on price movement.
Stanbic IBTC along with BGL has been a strong proponent of recapitalisation of capital market operators, an exercise that promises to prune the number of operators.
Recently, BGL was hit by insider deals scandals and was suspended by the Securities and Exchange Commission (SEC).
BGL Chief Executive Officer (CEO), Albert Okumagba, is helping the Economic and Financial Crimes Commission to unravel some issues involving his operations.
On Tuesday, September 8, the SEC withdrew approval for the proposed N20.4 billion rights issue of Stanbic IBTC Holding Company in view of the notice of an investigation of alleged financial impropriety by the Financial Reporting Council of Nigeria (FRC) in the group’s financial statements.
Stanbic IBTC promised to “continue to engage with the relevant regulatory bodies to ensure that these enquiries are addressed. Stanbic IBTC Bank Plc, the banking subsidiary of Stanbic IBTC Holdings Plc, remains well capitalised and has sufficient liquidity.”
FRC Executive Secretary/CEO, Jim Obazee, disclosed in Abuja after a meeting with National Office for Technology Acquisition and Promotion, Director General, Dan-Azumi Ibrahim, that the move was in response to a petition by shareholders of the bank.
The petition, written by Trusted Shareholders Association, drew attention to unapproved transactions the bank allegedly conducted with its foreign technical partners.
It alleged that tens of billions of naira have not been returned to the profit and loss account of Stanbic IBTC Bank.
In other words, the bank allegedly under-declared its accruals, thereby short-paying tax to the government.