SEC decided to intervene and its options on action against Menzgold was endless yet it choose to issue its warnings too.
SEC decided to intervene and its options on action against Menzgold was endless yet it choose to issue its warnings too.

This is a continuation of The Menzgold Tale by Keera Akosua Nyansapor detailing some facts and details about the Menzgold saga in Ghana. Read the first part here > Brick mansions and 3 lies – The Menzgold Tale

Let’s explore the role of the various regulators. The Securities and Exchange Commission (SEC) and other regulators are described as the statutory body mandated by the Securities Industry Act 2016 (Act 929) to promote the orderly growth and development of an efficient, fair and transparent securities market in which investors and the integrity of the market are protected.

Their broader mantle captured on their website involves check and licensing of operatives. The SEC is mandated to create a system of fairness, regulate operations of companies, offer sanctions, probe all allegations of wrong doings. Lastly and most importantly protect the citizens. This is called paternalistic role to of state institutions and an offshoot of the social contract theory. In totality the SEC must ensure sustainability and growth of market.

SEC decided to intervene and its options on action against Menzgold was endless yet it choose to issue its warnings too.
SEC decided to intervene and its options on action against Menzgold was endless yet it choose to issue its warnings too.

After MenzGold operations had gained roots and BoG was finally picking an interest, the SEC decided to intervene and its options on action against Menzgold was endless yet it choose to issue its warnings too. This is a problematic stance and one would hope regulators with statutory powers will do more than issue warnings.

A year later in September 2018 the SEC issued a statement. For the avoidance of doubt the SEC directive stated as follows: “Accordingly, the SEC hereby directs Menzgold Company Limited to shut down immediately the business of trading in gold collectibles with guaranteed returns to clients which constitutes, in essence, dealing in securities with neither the necessary licence nor disclosures authorized by the SEC. No new contracts should be created and all advertising of the investment business halted with immediate effect”. The bone of contention raised by the SEC was fixed returns promised by the dealers.

The SEC in its official communique reiterated; “The Rule on guaranteeing returns has existed in the Compliance Manual for Broker-Dealers, Investment Advisers and Representatives since January 2008. On the 14 day of April 2014 and the 31 day of march 2015 respectively Circulars with Numbers SEC/CIR/001/2014 and SEC/CIR/002/03/15 were issued by the SEC cautioning fund managers about the forbidden practice of guaranteeing returns and issuing fixed deposits to clients. The recent Directive with number SEC/FM/DIRECTIVE/06-18 on the 18 June 2018 only provided a final transition period to completely fade out that illegal market practice. The SEC has not requested any fund manager to revise its provisions in Management Agreements executed with clients on redemption of funds over an extended period whatsoever. Clients should insist on enforcing the terms and provisions on client redemption provisions according to the Management Agreement by the Fund Manager and the Client.

In the statement above, the SEC made it clear that there is a rule that prevents any company from promising fixed deposits, yet over the long years that MenzGold was operating, it had boldly promised a fixed lavish return on investments yet the SEC took no action.

To be clear, from the very first day MenzGold started its operation, it was in breach of a number of rules that warranted the revoking of its license yet our regulators took no action. As such the business grew in strength and number and when the regulators decided it was time to grow a conscience and protect the people, the people were in too deep hence the people began a campaign to defend MenzGold (their business partner) making the regulators seem abusive and checks targeted to destroy MenzGold.

The regulators’ delay gave MenzGold the opportunity to build confidence through its consistency in paying returns and other obligations, as such when the regulators stepped in, it seemed impossible to shake that confidence off.

The SEC had the mandate to withdraw the license pending investigation amongst other alternatives stated in its mandate yet chose to sit idle for years. What is the public to do when the watchdogs to protect them sit idle and issue warnings? Experts in a field of study with no power can issue warning but a regulator takes action. A regulator remembers its mandate to protect its people and its economy by weeding out any unscrupulous conduct.

Even on the face of issues without looking at the bank records and other privileged data, one can clearly see some uncouth conduct that would send warning signs to any well-meaning regulator to issue a halt and do a proper probe. Even in the communiques issued by these regulators none of them asserts its authority to take responsibility for the circumstance but rather are quick to transfer full culpability to the uninformed victims. Can one imagine such contemptible conduct from regulators in the West?

This post was edited by iGhanaian Editors for correctness, however, all views expressed herein remain that of the author, Keera Akosua Nyansapor  and are solely her. You can contact the author via

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