Nigeria’s SEC to Investigate Oando for Possible Insider Dealing

LAGOS (Capital Markets in Africa) – The Nigerian Securities and Exchange Commission ordered an insider-trading investigation into Oando Plc and suspended dealing in the energy company’s shares.

A comprehensive review of Lagos-based Oando also found discrepancies in its shareholding structure and related-party transactions that were not done “at arm’s length,” the regulator said in an emailed statement on Wednesday. Alero Balogun, a spokeswoman for Oando, said she couldn’t immediately comment on the allegations when contacted by phone.

The findings of the review “are weighty and therefore need to be further investigated,” the SEC said. A forensic audit into Oando will be carried out by a group of auditors, lawyers, stockbrokers and registrars, while trading will be halted until Oct. 20. After that, Oando’s shares will be placed into a so-called technical suspension, which doesn’t allow any price fluctuations in a security, the regulator said.

The Nigerian SEC started investigating Oando after two complaints of alleged corporate governance failures and financial mismanagement. Some protesters demonstrated during the company’s annual meeting last month, demanding the resignation of Chief Executive Officer Wale Tinubu because of Oando’s high debt levels and a drop in its share price. The stock has declined 40 percent over the past five years compared with a 65 percent gain in the Nigerian Stock Exchange All Share Index.

“The suspension is good on the part of SEC, it shows that there is discipline in the market and sends a message across to other companies that if there are cases of infringement, there are consequences for such actions,” said Omonegho Imoagene, analyst at Cardinalstone Partners Ltd. in Lagos. “Nobody is going to buy the stock at the current price during the technical suspension. The stock is going to crash. Current investors, especially minority shareholders, are going to lose a lot of money.”

Source: Bloomberg Business News