Mutual Funds: SEC commences enforcement of independent custody.

The Securities and Exchange Commission (SEC) has commenced full enforcement of a regulatory framework that mandates mutual funds’ managers to hold clients’ investment assets under independent custody.

According to Lamido Yuguda, Director General, Securities and Exchange Commission (SEC), the full enforcement of the custody requirement on all mutual funds was part of efforts to enhance investors’ protection and boost confidence in the market.

Under the rules, clients’ fund for collective investment should be held in safe and secure custody or electronically administered.

“The Nominee Company shall have no authority to demand for board membership of companies or to exercise any voting rights attached to shares registered in the nominee company’s name unless instructed to do so by its clients.

“No person or entity shall operate any product that pools investors’ monies, including discretionary or non-discretionary portfolios/funds except such person or entity is registered as a fund/portfolio manager.

“No fund and portfolio manager shall advertise, market or attract investors to the existence of any product, discretionary or non-discretionary other than registered collective investment schemes.

“Every fund or portfolio manager shall submit quarterly returns and annual reports in respect of all products, discretionary or non-discretionary portfolios/funds, in a form as determined by the Commission,”  according to SEC’s  statement.

Infringement of the rule by fund managers will attract penalties of not less than N500,000, additional N10,000 daily and risk of suspension among others.

Source: Mutual Funds: SEC commences enforcement of independent custody – StocksWatch (

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