SEC STARTS AUDIT TO RETRIEVE 5BILLION LOCKED UP FUNDS

SEC START AUDIT TO RETRIEVE 5BILLION LOCKED UP FUNDS
The Deputy Director-General of  the Securities and Exchange Commission, Mr. Paul Ababio says the commission has started forensic audits to determine how to retrieve money for investors, which have been locked up by fund managers across the country.
He explained that measures to retrieve about GH¢5 billion that is locked up in risky investments that they’re struggling to retrieve may include selling off the fund managers’ assets. “If part of their portfolio is distressed, we have to understand it to know what solution to deploy,” Mr. Ababio said in an interview in Accra. “We’ll look at what can be done for investors — we’ll look at liquidation.”
He elucidates further that, twenty-one firms are being audited, which will be completed by the end of the year. These are funds that are stuck in short-term unlisted bonds, direct private-equity stakes and related-party deals for small- and medium-sized businesses.
In all, 9 billion cedis was reported by fund managers as being tied up, of which GH¢4 billion was held in Treasury bill-linked instruments with banks, savings and loans companies or micro lenders, he said.
“After setting aside GH¢11.2 billion to bailout the banking industry and GH¢925 million to rescue micro lenders, the government plans to invest at least 3 billion cedis to help savings and loans companies, the finance ministry said in April. The funds will be used mainly to ease pressures from investments linked to T-bills” Mr. Ababio explained.
Cleaning up the nation’s 25 billion-cedis fund management industry became necessary after a recapitalization exercise by the central bank exposed weaknesses in the system.
While the drive strengthened the banking industry and reduced the number of lenders by almost a third, the early stages of the programme spurred panicked withdrawals from depositors trying to access their savings, drying up liquidity among fund managers.
“SEC rules forbid fund managers from directly underwriting corporate debt or taking straight private-equity positions, even though they can lend to businesses through reputable financial institutions and invest in a private-equity firm, which then acquires stakes in companies, he concluded”.

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