The stockbroking sector in Nigeria has expressed concerns regarding banks that have either recently raised or are in the process of raising new capital through the stock market.

They claim these banks are repeating the infractions seen during the 2005 recapitalization by circumventing the role of receiving agents.

During the subscription period, receiving agents serve as the main contact for investors wishing to purchase new securities.

Over the past seven months, the stock market has experienced a significant increase in deal values, rising by approximately 44 percent, or N941.62 billion, as banks intensify their recapitalization efforts.

Institutions such as Fidelity Bank, GTCO, and Access Holdings have successfully completed their capital raising initiatives on the exchange, while FCMB Group and Zenith Bank are still actively pursuing their share offerings.

The Central Bank of Nigeria (CBN) announced a two-year bank recapitalization initiative on March 28, 2024, which began on April 1 and is projected to conclude on March 31, 2026.

The Association of Securities Dealing Houses of Nigeria (ASHON) has released a position paper entitled “Need for issuers and investors to comply with capital markets rules and established practices.” In this document, ASHON stated that certain banks have delegated the management of their Shareholders Registers to employees, including drivers and receptionists, who are responsible for issuing and receiving share subscription forms from investors. This practice circumvents the registered stockbroking firms that serve as Receiving Agents. The completed Offer Forms are subsequently submitted directly to the banks, their branches, and subsidiaries, including Registrars.

ASHON expressed concerns regarding the potential for misuse of the process, citing the 2005 bank recapitalization incident in which stockbrokers were unjustly held accountable for violations carried out by banks.

In a statement issued by Sam Onukwue, chairman of ASHON, and Athan Ogbozor, Executive Secretary of ASHON, the Stockbrokers expressed their concern regarding recent actions taken by certain banks.

They noted that, in an urgent attempt to raise funds to meet the new capital requirements set by the Central Bank of Nigeria (CBN), some banks have found ways to circumvent Stockbrokers as Receiving Agents.

Furthermore, these banks have established unauthorized dedicated portals as part of their marketing strategy, aimed at gathering investors' information and pressuring them to open accounts with their subsidiaries rather than with their Stockbrokers.

Such practices undermine the principles of fair marketing and infringe upon the established role of stockbrokers, who are primarily responsible for marketing shares and providing investment advice to clients.

ASHON stated, "The current unconventional methods of share subscription hinder unsuspecting investors from making informed investment choices that align with their financial goals, risk appetite, investment timeline, and funding sources, among other factors."

They further recommend that both issuers and investors engage directly with Trading Licence Holders who are members of ASHON to receive reliable professional guidance prior to any share subscription.

These firms are properly registered, regulated by the SEC, and licensed by reputable securities market platforms.

The catalog of acknowledged Trading License Holders or dealing -member firms can be accessed on the websites of the Securities and Exchange Commission (SEC); www.sec.gov.ng; Nigerian Exchange Limited (NGX); www. Ngxgroup.com and ASHON; www.ashonng.org”, ASHON further stated.