First Fund: Customers struggling to retrieve locked funds despite SEC intervention

First Fund: Customers struggling to retrieve locked funds despite SEC intervention

The Coalition of Aggrieved Customers of defunct First Fund limited have expressed their dissatisfaction over the inability of the Securities and Exchange Commission (SEC) to ensure the payment of their locked up funds for close to three years now.

The Coalition’s position is in view of the change in the management of the Fund by SEC two times since 2019 when the Commission withdrew the licenses of 53 Fund Management Companies including that of First Fund Limited.

Speaking to NorvanReports, Spokesperson for the Coalition, Kwame Mawiko, noted despite the Coalition’s constant engagement with the Commission to see to the conclusion of the matter and aid them retrieve their locked funds, the regulator seems not to be making frantic efforts to ensure payment of locked funds.

“We have been engaging SEC but they are not doing anything at all, we always write letters to SEC requesting that payments are made but nothing happens, they do nothing. SEC must sit-up and rise to its mandate of protecting investors,” he said.

More than 24,000 customers with a total investment of about GH¢170 million have been locked up with the Fund.

Genesis of the issue

According to Mr Mawuko, the Coalition upon realising that the now defunct First Fund – then managed by First Banc Financial Services – was struggling in meeting withdrawal requests from customers, it made complaints to SEC for which SEC as the regulator stepped in to find solutions to the fund’s inability to meet withdrawal claims.

According to him, SEC upon getting involved, demanded for a change in managers of the Fund pressuring the Board of First Banc to handover management of the Fund to TTL Capital Limited.

After handing over management to TTL Capital in November 2019, customers were still unable to to gain access to their funds.

Upon making enquiries, customers were told their claims by were being validated by TTL Capital for which they would have to wait, also investments (including those in the collapsed banks) made by the previous fund manager – First Banc – were being validated and retrieved.

Mr Mawuko tells NorvanReports that for two years, TTL was able to validate only 18% of the total claims made by customers with the 82% of the claims not validated.

For this reason, the Coalition went back to SEC for a resolution of the matter for which once again SEC appointed another Fund Manager being Octane DC which is the current manager of First Fund.

“We wrote two letters to SEC, one in July 2021 and another in November 2021, following TTL’s assertion that it had validated only 18% of the claims, and we wanted SEC to do something about it, but even with that SEC provided no concrete resolution to the matter.

“In fact, it was after writing our second letter to SEC in November last year that we got to know that TTL Capital had been removed and replaced with Octane DC as the new Fund Manager,” he noted.

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Validated Claims

Mr Mawuko asserts that of the 18% validated claims, customers are allowed to only withdraw 80% of the total validated claims.

This, he noted, implies that customers get to only withdraw 12% of the their validated claims.

“When our members were told that they could withdraw their monies, some went and could withdraw as much as GHS 500 and GHS 1,000.

“Most of our members are petty traders and so they don’t have much, most of them have GHs 10,000 and GHS 5,000 in there, so to be able to withdraw only 12% is not the best,” he remarked.

Use of new investments

In a press statement dated January 17, 2022, and issued by Octane DC, the new Fund Managers assert that new deposits received from customers will be used for new investments and not used to settle redemption requests or claims from other customers.

“Some shareholders have requested payment mediums for additional investments into the Fund. We will complete mandate updates with all holding banks of the Fund by the end of January 2022. Following this, we will re-activate all receiving points for the Fund and new deposits can be made.

“The Fund Manager will use the new deposits for new investments for the Fund and will not utilize new inflows for redemption requests from other shareholders,” read the statement.

Reacting to the statement, Mr Mawuko first of all denied the assertion by Octane DC indicating that some members of the Coalition are willing to make additional investments with the Fund.

“I can say on authority that no member of the Coalition is making new investments with the Fund, it’s just an attempt by Octane to make new deposits from our members. The company is putting up a certain posture which seems to say that they don’t want to pay us our monies but still get people to invest with them.

“And that’s a very dangerous posture for the company to put up,” he said.

Coalition’s message to SEC and Octane DC

Members of the Coalition, Mr Mawuko notes, want their monies back seeing that a good portion of their monies have already been lost.

It also wants the SEC to rise to its mandate of protecting investors and ultimately ensure that locked up funds of members of the Coalition are paid back to them.