SEC defends collapse of 47 FMCs; use of mark-to-market approach in valuation of investments
The Securities and Exchange Commission (SEC) in Ghana has come under scrutiny for its recent actions, particularly in relation to the liquidation of 47 fund management companies and the debt exchange programme undertaken by the Finance Ministry. Despite criticisms from some quarters, the Director General of the SEC, Rev. Daniel Ogbarmey Tetteh, has defended the commission’s actions and maintained that it has acted within its powers to protect investors in the capital market space.
In an interview on Thursday, Rev. Ogbarmey Tetteh stated that the SEC is guided by law and must take specific actions within the bounds of that law. He added that outside of these actions, the commission cannot proceed. This assertion implies that the SEC’s actions are constrained by legal and regulatory frameworks, which limit its ability to take any action it deems fit to protect investors.
Moreover, Rev. Ogbarmey Tetteh defended the SEC’s recent directive to Fund and Assets Managers to strictly use the Mark to Market approach for the valuation of investments. This method requires fund managers, custodians, and trustees to use the fair value/mark-to-market valuation method in valuing portfolios of collective investment schemes such as unit trusts and mutual funds. The Mark to Market approach reflects prevailing market values on the capital market and may result in changes in the value of clients’ holdings. The directive, which took effect on November 1, 2022, has been criticized for adversely affecting investors and investment houses in the country.
However, Rev. Ogbarmey Tetteh maintained that all stakeholders must be handled equally in investment and that the Mark to Market approach was necessary to stabilize the industry. The SEC’s stance on this matter highlights the importance of fair and transparent valuation practices in the capital market, which is essential for maintaining investor confidence.
Despite the SEC’s efforts to protect investors, some members of the public have criticized the commission for not taking certain drastic actions in response to recent happenings in the capital market. These criticisms suggest that there may be a lack of trust in the SEC’s ability to effectively regulate the capital market and protect investors.
To improve investor confidence, the SEC may need to take additional steps to address concerns raised by the public. This could include increasing transparency in its operations, improving communication with stakeholders, and enhancing its enforcement mechanisms to ensure that wrongdoers are held accountable.
