Menzgold Ghana Limited has called the bluff of the Securities & Exchange Commission (SEC), asking it to suspend its operations.
According to Menzgold, it cannot comply with the directive to shut down or suspend its operations as directed by the SEC in its letter dated September 7, 2018.
A letter authored Kwame Akuffo & Co Unlimited indicated that it finds the treatment being meted out by the SEC to its clients unfortunate, given that it wrote to SEC seeking a two-week extension to enable it respond to certain demands by the regulator.
SEC had directed Menzgold Ghana Limited to immediately stop trading in gold collectibles.
But the company’s lawyers said: “Your earlier letter of 27th August, 2018, gave our client a two-day window to respond to a number of queries. You will recall that pursuant to this we requested by way of a letter dated 29th of August, 2018, for a two-week extension to enable us respond in adequate manner. In acknowledging receipt of our letter by way of yours dated 30th August, 2018, you were silent about our plea for extension. We took same to be an agreement to extend, especially when we did not receive any information to the contrary from you.
“We, therefore, find it unfortunate that without waiting for the said time to elapse, nor giving our client any notice whatsoever, but in an unhealthy overreach, you sent to our client a letter with a heading which states ‘Notice to suspend trading without licence.’ While the heading of the said letter indicates a purported suspension of trading without licence, the content, however, speaks of a direction that our client’s business should be shut down. The contradictions in your directive are for you to resolve, and it makes your intentions difficult for our client to understand or comply.”
The lawyers continued: “Be that as it may, we are instructed to respectfully inform you that our client’s business module which is essentially that of the sale of gold collectibles is not one that falls within your regulatory regime. Please, be informed that our client is not issuing any ‘tradable note’ as you erroneously stated in your letter of 7th September, 2018.”
The SEC, in a letter dated September 7, 2018, and signed by Prosper Ababio, Deputy Director General to Nana Appiah Mensah, Chief Executive Officer (CEO) of Menzgold Ghana Limited, said Menzgold’s cold collectible transactions constitute dealing in securities with neither the necessary licence nor disclosures authorised by SEC.
SEC instructed: “No new contracts should be created and all advertising of the investment business halted with immediate effect. Failure to comply with this directive will lead to the SEC employing other relevant measures under the law to enforce compliance.”
SEC explained: “This directive does not preclude you from continuing your other businesses of assaying, purchasing gold from small-scale miners and export of gold.”
Giving reasons why it took the action, the SEC said it had keenly followed and investigated operations of Menzgold Ghana since 2017.
The Commission said it paid a visit to the head office of the company on 23rd August, 2018, and met Nana Yaw Offei, Commercial Manager and Rev Derek Akubia, an adviser to the CEO of Menzgold.
“The interactions with Mr Offei and Rev Derek Akubia confirmed to SEC the view that the aspect of Menzgold’s business which involves the purchase/deposit of gold collectibles from the public and contracts issued with guaranteed returns with clients is capital markets activity (issuance of gold-backed depository notes to the public) under Act 929 without a valid licence issued by SEC contrary to Section 109 of Act 929 with consequences under section 206 (1) of the same act.”
It revealed that subsequent to the visit by the SEC officials, a request for specific detailed information was made and Menzgold, through its lawyers, agreed to provide the necessary information requested by the SEC within 14 days.
It also said the provision of the information did not make that aspect of Menzgold’s operations any less of an illegality under Act 929, as well as threat to unsuspecting and uninformed investors.
On 27th August, this year, SEC, Bank of Ghana (BoG) and the Minerals Commission met to discuss the activities of Menzgold Ghana Limited.
During the meeting, it was agreed that SEC and BoG should write to the Minerals Commission to express the concerns with respect to Menzgold.
It later emerged that Menzgold was a licencee of the Minerals Commission so it could purchase gold from licensed gold sellers and export same.
Needless Directive
Management of Menzgold Ghana Limited yesterday condemned the directive by SEC, saying it was needless.
It said the leak to the media of a confidential meeting “to say the least, is in bad faith and distasteful; as it defeats our confidence in the body and an affront to cooperation. We totally condemn it!”
“As a law-abiding organisation, we have referred the matter to our lawyers and rest assured the right action shall be taken. We hereby assure all our cherished customers that neither Menzgold as a business entity nor any of its products has been shut down. We call for calm as we deal with this matter to its logical conclusion.”
Panic
A lot of Menzgold customers were said to have besieged the premises of the company to retrieve their deposits after the directive of SEC went viral yesterday.
The chaos started when customers were denied entry into the premises of Menzgold.
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