The Securities and Exchange Commission (SEC) has suspended Ecobank Plc from acting as a receiving banker and from all capital market activities.

The suspension is as a result of the role played by the bank in a complaint by Avil Services Ltd relating to a margin loan transaction with Arian Capital Management Ltd

Under the said transaction, Arian Capital Management Ltd (a fund manager) advanced margin loan to Avil Services Ltd which was secured by 555, 555 units of  First Bank of Nigeria Plc shares belonging to Avil Services Ltd.

At the termination of the margin facility, Avil Services Ltd demanded for the lifting of the lien placed on the shares but was informed by Arian Capital Management Ltd that the said shares were used as collateral for a “Global Margin Facility” that was granted to it (Arian Capital Management Ltd) by Ecobank Nigeria Plc in a tripartite arrangement.

Dissatisfied by the explanation offered by Arian Capital Management Ltd, the SEC in May 2012, suspended Arian Capital Management Ltd from all capital market activities for withholding the said shares and accruals thereon.

In July 2012, the SEC pursuant to Section 13 (r) and (t) of the Investments and Securities Act 2007 requested further explanation from Ecobank Nigeria Plc on the consent of Avil Services Ltd in the  “Global Margin Facility”. This explanation is yet to come from Ecobank Nigeria Plc despite repeated demands for it.

The suspension was imposed on Ecobank Nigeria Plc on February 5, 2013 for its perceived connivance with Arian Capital Management Ltd to convert the 555, 555 units of First Bank of Nigeria Plc shares belonging to Avil Services Ltd.

The suspension will continue to be in force until the bank clears all the issues relating to the use of Avil Services Ltd’s shares as collateral for the Global Margin Facility it granted Arian Capital Management Ltd.

Source: Secutities Exchange Commision, Nigeria