Nigeria’s Investments and Securities Tribunal, (IST) said on Thursday 17th December 2020 that it had made interim Orders restraining an unregistered Fintech company, Chaka Technologies Limited, and its promoters from advertising or offering for sale shares, stock or other securities of companies or other entities.
The interim Orders, which apply to all Chaka platforms, were granted pursuant to an application by the Securities and Exchange Commission. In the application, the Commission – through its solicitor, Dr. Chuka Agbu SAN – informed the Tribunal that the Defendants were engaged in investment activities, including providing a platform for the purchase of shares in foreign companies such as Google, Amazon and Alibaba. The Commission also stated that the said activities were carried out by the Defendants outside the regulatory purview of the Commission and without requisite registration, as stipulated by the Investment and Securities Act 2007. As disclosed in the processes filed by the Commission, the objective of the proceedings is to ensure that all investment activities and market players are duly regulated by the Commission, in line with the requirements of the law.
The proceedings came on the heels of the Commission’s avowed intention to encourage innovation within the market space, whilst also ensuring that all market activities are brought within regulatory purview and conducted within the ambit of the law and extant regulations. The Commission is concerned that without proper regulation, the genuine aspirations of market innovators and investors could be subverted through the activities of unscrupulous actors who would try to exploit the growing popularity of Fintech investment options, to the detriment of the investing public.
In an emailed response to Lagos Times newspaper, Chaka’s founder Tosin Osibodu said that the company only learned about SEC’s position on the same day the statement was published on their website and that while Chaka was expecting a formal order from SEC, it assured the public and its clients that all investments are placed by a duly licensed entity and remain safe through Citi Investments (using the Chaka platform), and will continue to be custodied by an SEC-regulated broker. The company said that it does not advertise, solicit, or offer securities of companies as alleged.
Chaka said: “Since we began our journey in 2019, we have been transparent about our regulatory status, leveraging strategic partnerships with registered brokers in the U.S and in Nigeria, specifically Citi Investment Capital, which is regulated by the SEC. Our commitment to investor education, trust, and transparency remain a top priority.
We would like to state that Citi Investment Capital is fully compliant with the commission’s regulations as all local equities are offered through a locally licensed
brokerage firm, registered with the Nigerian Stock Exchange (NSE), Central Securities Clearing System (CSCS), and regulated by Nigeria’s Securities and Exchanges Commission (SEC). Following the SEC statement, our legal and operations teams are working to accelerate a resolution. Further updates will be provided by Monday.