- SEC Opens Door to AUM Levy Concessions for Distressed Investment Portfolios – Deputy Director-General
Ghana’s Securities and Exchange Commission has opened the door to concessions for fund managers holding genuinely distressed or non-performing portfolios under its new asset-under-management levy regime, offering a potential safeguard for investors whose returns are already being eroded by troubled assets.
The move represents an important qualification to the regulator’s new funding framework, which has drawn criticism from parts of the investment industry over concerns that charges linked to assets under management could still apply even where portfolios are making losses or generating little income.
Mensah Thompson, Deputy Director-General of the Securities and Exchange Commission Ghana, said the regulator would consider relief where investment managers can demonstrate that the portfolios concerned are genuinely distressed.
“It will be no point for the commission to be charging fees on AUM on a portfolio that is not performing or that is distressed,” he said during a special edition of the NorvanReports Economic Governance Platform on X Space on Sunday, August 16, 2026.
The programme, hosted by Norvan Acquah-Hayford, Managing Editor of NorvanReports, was held under the theme “Regulating or Overcharging? Examining SEC’s New Levies and the Future of Ghana’s Capital Market,” with particular focus on the question of who ultimately bears the cost when regulatory charges rise.
Mr Thompson’s intervention addresses one of the industry’s central concerns: whether investors could be required to absorb additional regulatory costs at precisely the point when the underlying investments are already under financial stress.
Under an AUM-based system, the levy is tied principally to the value of assets being managed rather than the profitability of the fund manager or the investment return earned by the client. That provides the regulator with a relatively stable revenue base, but it also creates a difficult economic problem when funds hold impaired, illiquid or non-performing assets whose nominal values may not accurately reflect their ability to generate cash or returns.
A portfolio can therefore remain sizeable on paper while producing weak or negative investment outcomes, meaning a mechanically applied levy could deepen losses if the charge is ultimately passed through to clients.
The problem becomes particularly visible in distressed funds where investors may already be unable to redeem their money freely or where the underlying securities have become difficult to value or sell.
“If there are genuine concessions, we will make them,” Mr Thompson said, signalling that the SEC is prepared to differentiate between normally performing portfolios and those facing genuine financial distress. The emerging approach appears to favour case-by-case relief rather than an automatic exemption for any fund that records poor returns.
That distinction matters because temporary underperformance and genuine distress are not the same thing. Equity prices can fall and recover, bond values can fluctuate with interest rates and investment funds can record negative returns without their underlying assets becoming impaired, meaning an automatic exemption triggered by weak performance could create incentives for operators to classify ordinary investment volatility as distress.
Case-by-case assessment reduces that risk, but it also introduces the possibility of regulatory uncertainty if operators cannot determine in advance whether they will qualify for relief. Fund managers need reasonable predictability over regulatory costs when setting management fees, designing investment products and communicating expected returns to clients, making clear eligibility rules important if concessions are to become more than an informal assurance.
The SEC may therefore need to define what constitutes a distressed portfolio, the documentation required to demonstrate impairment, whether relief applies to an entire fund or only specific assets, how any concession would be calculated and the period for which it would remain effective. Transparent rules would also reduce the risk that similar portfolios receive materially different treatment depending on how individual applications are assessed.
The debate also reinforces a broader issue surrounding the economic incidence of the SEC’s new levies. A regulatory obligation may formally sit with a fund manager, broker or investment institution, but the cost can ultimately be absorbed through lower institutional profits or transferred to clients through management fees, administrative charges and product pricing.
That distinction becomes especially important for retail investors because charges that appear modest relative to total assets can become significant when investment returns are close to zero or negative. In a distressed portfolio, an additional levy can compound losses and further delay recovery, particularly where investors have limited ability to exit the fund or where assets must be sold to generate cash for regulatory payments.
Mr Thompson’s comments therefore suggest the SEC recognises that the entity responsible for remitting a levy is not necessarily the party that ultimately bears its economic burden. The willingness to consider concessions could help protect investors from being charged repeatedly against assets whose financial condition has already deteriorated.
There is, however, an important counterargument because distressed portfolios can require more regulatory supervision rather than less. When funds become illiquid or impaired, regulators may need to intensify monitoring, review valuation practices, scrutinise disclosures, supervise restructurings and ensure that managers treat clients fairly, creating a paradox in which the most troubled parts of the market can also impose the greatest supervisory costs.
Temporary and evidence-based relief could provide a middle ground. The SEC could reduce or defer charges on qualifying distressed portfolios for clearly defined periods while conducting regular reviews to determine whether the underlying conditions continue to justify concessions, preserving regulatory flexibility without creating a permanent exemption.
The broader policy test is whether Ghana can finance stronger capital-market supervision without placing disproportionate costs on investors already suffering losses. The SEC argues that additional revenue is needed to strengthen staffing, technology, enforcement and investor protection, but the legitimacy of that funding model will depend partly on whether its implementation is considered proportionate and economically fair.
Mr Thompson’s comments indicate that the Commission is prepared to recognise differences in the financial health of the assets it regulates. The next challenge will be translating that discretion into clear and predictable rules that allow genuinely distressed funds to obtain relief without creating loopholes that undermine the regulator’s revenue base.
For investors and fund managers, the crucial issue is no longer simply whether concessions are possible, but how they will work in practice. The success of the new levy framework may ultimately depend on whether the SEC can fund credible supervision while remaining sufficiently flexible to avoid worsening losses in the very portfolios where investor protection is most urgently needed.
