Fund managers under the regulatory purview of the Securities and Exchange Commission (SEC) have begun submitting monthly interconnectedness reports. The first monthly deadline set by the Securities and Exchange Commission, Ghana’s capital market regulator for companies under its purview to provide information on interconnectedness within the Fund Management sector expired on Friday last week. The information is supposed to form part of SEC’s reporting to the Financial Stability Advisory Council (FSC) its members being the Ministry of Finance, the Bank of Ghana (BOG), SEC itself, the National Insurance Commission (NIC), National Pensions Regulatory Authority (NPRA) and the Ghana Deposit Protection Corporation (GDPC). The Council’s mandate is to strengthen and reinforce the stability of the financial sector.
. The reports shall further form the basis of considering the creation of an investor protection fund to support the SEC’s execution of its mandate.
Members of the FSC in their capacity as Regulators within their sector are all required to provide the FSC with regular, periodic interconnectedness reports
Interconnectedness has been identified as an underlying corporate governance and risk management shortcoming of many failed financial services providers in Ghana, fund managers included. Several fund managers, for instance were found to have diverted clients funds under management to sibling companies engaged in activities disallowed by the fund managers statutory mandates for portfolio investment. In many cases such sibling firms became insolvent taking funds under management down with them.
In other cases, banks took guaranteed deposits from customers and passed them onto licensed fund managers who then invested them in risk laden investments, such as equities.
Interconnectedness reports are therefore meant to identify dealings between fund managers and interconnected enterprises to determine whether such dealings are legal, and even if they are, whether they represent inordinate risk to the clients whose funds are under management of fund managers regulated by SEC.
All fund managers under the regulatory purview of SEC were directed, on September 30. to complete and submit on monthly basis reports the Interconnectedness Reports in excel format. The first month’s completed report were to be submitted to the SEC through [email protected] by Friday, 6th November 2020.
Reporting for subsequent periods shall be submitted with the other monthly reports by the 15th of the subsequent month.
This Directive is issued pursuant to section 3 (e)(i)(m) and 209 of the Securities Industry Act 2016 (Act 929).