Customers of FirstBanc, Blackshield Capital in limbo over claims payment



Customers of FirstBanc Financial Services and Blackshield Capital Management (formerly Gold Coast Fund Management) will not be part of the government’s bailout package for defunct fund management companies until the Appeals Court makes a decision on their license revocation, the Securities and Exchange Commission (SEC) has said.

The two were part of the 50 firms whose licenses were revoked by SEC due to their failure to return clients’ funds totaling GH¢8 billion, and significant breaches of applicable rules that created risks to the country’s financial stability.

But the defunct companies have since filed applications in Court challenging the SEC’s decision to revoke their licences.

Claims totaling GH¢5.4 billion were filed against the two firms, GH¢800 million in the books of FirstBanc Financial Services and GHS4.6 billion in the books of the former Gold Coast Fund Management (now Blackshield Capital Management).

The SEC explained that their appeals will have to be determined first by the Court before discussions on their bailout packages can commence.


“These cases are at various stages in Court, and have resulted in a situation where no other action can be taken by the SEC or the Registrar General to proceed with official liquidation and government bailout of their clients until the Court decides on them, the Securities and Exchange Commission said in a statement last Friday.

However, the Court, currently on legal vacation, will resume in October.

Blackshield alleges deliberate exclusion from bailout

In a six-page rejoinder, however, Blackshield Fund Management debunked the SEC’s claim accusing management of lack of cooperation and litigation, which the regulator used as part of its basis for excluding the firm’s clients form the phase one of the yet-to-be-announced bailout packages.

The Groupe Nduom subsidiary however, argued that the litigation does not bar the SEC from including its clients in the bailout package, describing it as an attempt by the capital market regulator to mislead the public.

“This allegation against Blackshield is yet another attempt to mislead the public into blaming BlackShield for its failures. It is noteworthy, that the SEC, refused BlackShield’s application to cease executing the order of revocation pending the hearing of its complaint.

The SEC disregarded this application by BlackShield and proceeded to deal with the assets of BlackShield despite the hearing. It is therefore surprising that the SEC would use the pendency of the same matter as an excuse to perform a duty which BlackShield has always supported and encouraged the SEC to do,” the letter contended.

The management further argued that “more importantly though, going by SEC’s own referencing to happenings in respect of SDIs and MFIs, the commencement of actions by Unibank, Unicredit and GN Bank challenging the revocation of their license by BOG in Court, which matters are yet to be decided by the Court, was no bar to the inclusion of their customers in the government bailout package.

The action by BlackShield challenging the procedure of the AHC in deciding its complaint, therefore, ought not to affect the inclusion of customers of BlackShield as SEC has sought to do especially when the intention of the bailout, is to grant relief to all customers.”

Blackshield expressed its readiness to collaborate with the SEC for the inclusion of its clients who constitute about 80 percent of total claims in the government bailout package.

Bailout Package

The Official Liquidator will communicate details of the government’s bailout package to the clients of the defunct firms in September, the SEC disclosed.

The first part of the two-phased exercise will cover clients of the 22 companies currently under official liquidation per Court orders, based on their validated claims.

The second phase would cover clients of the remaining companies after the liquidation orders are secured.

source; Business 24

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