SEC addresses Blackshield clients’ concerns …calls for calm

The Securities and Exchange Commission (SEC) has addressed concerns raised by clients of Blackshield Fund Management Company Limited – formerly known as Gold Coast Fund Management Limited, regarding disbursement of the GH¢5.5billion bailout funds approved by parliament and the progression of the winding-up order process.

In a statement, the SEC said the GH¢5.5billion approved by parliament was for all investors of the 47 companies that had claims by investors and not solely for Blackshield/Gold Coast investors. It emphasised that all investors with validated claims have been contacted by the Amalgamated Fund and GCB Capital Ltd. – the entities managing implementation of the bailout. However, government has yet to release the full GH¢5.5billion to the implementing agencies.

The SEC provided updates on the disbursement of bailout funds, stating that GH¢4.6billion has been allocated – with GH¢3.1billion assigned to Amalgamated Fund Tier 1 payments and GH¢1.45billion to Amalgamated Fund Tier 2 payments. The organisation also mentioned the partial bailout programme which entailed payment of sums up to GH¢50,000 for clients of Blackshield/Gold Coast and other companies who had not received winding-up orders from the court by October 2020 but whose claims had been validated.

Regarding progression of the winding-up process, the SEC said the decision to disburse bailout funds after validation of claims and an official winding-up order by the court was to ensure that all claims were verified and the assets and liabilities of the companies were transferred to the Registrar of Companies. In compliance with the Corporate Insolvency and Restructuring Act, 2020, an official winding-up order can only be granted by a court; hence the ongoing court process between the Office of the Registrar of Companies and Blackshield/Gold Coast.

The SEC clarified that it has complied fully with Blackshield/Gold Coast’s request for documents and is not delaying the court process.

The SEC stressed that Blackshield/Gold Coast’s lawyers were granted access to all documents when the company appealed the revocation decision in November 2019. It also noted that the server with critical information for Blackshield/Gold Coast was in the company’s custody from the date of revocation until the SEC sought help from the Economic and Organised Crime Office to retrieve it in August 2020.

The SEC urged affected clients to remain calm and rely only on information provided by SEC and the official liquidator. The organisation has been working to protect investors’ interests and the capital market’s integrity since the revocation of licences from fifty-three fund management companies (FMCs) on 8th November 2019. The licences were revoked due to various regulatory breaches; including their inability to return clients’ funds estimated at GH¢8billion, and significant breaches of applicable rules which created risks to financial stability.

Following the revocation of licences, the SEC took several measures to protect investors – including notifying the Registrar of Companies/Registrar-General to petition the court for orders to commence official liquidation of the FMCs – appointing an agent to secure the assets of affected companies, engaging government on a bailout package, and mandating the agent to receive and validate claims from affected clients of the FMCs.

SEC reassured clients of Blackshield/Gold Coast that it is working closely with government, the official liquidator and other entities involved in the winding-up process to ensure that all claims are verified and assets and liabilities are transferred to the Registrar of Companies.