Oando restrains SEC from biased action with court order

Oando plc yesterday restrained Securities and Exchange Commission (SEC) from suspending trading in its shares at the Nigerian Stock Exchange (NSE).

In a statement, Oando said that the NSE and SEC were served with a court order on October 24, 2017 and they are legally obliged to comply with the interim orders pending the substantive determination of the suit.

The statement described the suspension of its shares from trading by Nigerian Stock Exchange as illegal, invalid and calculated to prejudice the business of the company. SEC said that an investigation into the company began in May this year, following a petition filed by Ansbury Inc. and Alhaji Dahiru Mangal. On Wednesday, October 18, 2017, SEC published a statement on its website detailing alleged infractions committed by Oando and penalties which included a directive to the Nigerian Stock Exchange (NSE) for a 48-hour full suspension followed by a technical suspension, in the trading of Oando shares and for a forensic audit into the affairs of the Company to be conducted.

On the same day, the NSE put a full suspension on the trading of Oando’s shares, and on Monday, October 23, 2017 this was replaced with an indefinite technical suspension. A technical suspension allows for continued trading of Oando shares without impacting the price. Since news of the SEC investigation broke, the company’s shares which had gained 27 per cent this year, has taken consistent hits. In July when the news initially broke its share price fell by N0.80 (from N8.35 on July 13 to N7.55 on July 14).

The share price continued on a downward spiral and last traded at N5.99, a fall of N2.36. But in a statement yesterday, Oando said: “We are of the view that the SEC’s directives are illegal, invalid and calculated to prejudice the business of the company. The company being dissatisfied with the most recent actions taken by the SEC and to safeguard the interests of the company and its shareholders immediately took steps to file an action with the Federal High Court (FHC) against the SEC and the NSE.”

According to the statement, the company obtained an ex-parte order from the FHC granting an interim injunction, via an order restraining the NSE from effecting the directive of the SEC to implement a technical suspension of the shares of the company, and an order restraining the SEC from conducting any forensic audit into the company’s affairs pending the hearing and determination of the matter.

The NSE and SEC were served with the court order on Tuesday, October 24, 2017 and the NSE and the SEC are legally obliged to comply with the interim orders pending the substantive determination of the suit. An Oando source advised that the company’s reasons for taking this stance against the Commission is the clear bias that has been shown towards the petitioners and the mismanagement of the investigation from inception. Firstly, there is fact that the SEC’s investigation of a public- traded company is public knowledge; a fact that has had a negative impact on the Company’s share and enterprise value, and led to some of the company’s shareholders questioning who the SEC is really protecting.

The source went on to say ‘There have been four media leaks to date, with sources indicating that the leaks have emanated from the SEC.’