The Investments and Securities Tribunal has ordered the Nigerian Deposit Insurance Corporation to pay a subscriber in the aborted All States Trust Bank Plc initial public offer, his principal sum of N2m.
IST made the disclosure in Abuja on Wednesday in a statement issued by the tribunal’s Head of Public and International Affairs, Mr. Kenneth Ezea.

In addition, the NDIC was ordered to pay an interest at two per cent above the Central Bank of Nigeria’s monetary policy rate on the invested amount, from March 2006, the day the NDIC took over the bank until the full liquidation of the principal sum. The private sector liability of All States was taken over by Ecobank Nigeria Plc last year under a purchase assumption arrangement.

The subscriber, Mr. Femi Davies, had dragged NDIC, CBN, the Securities and Exchange Commission and seven other respondents to the tribunal, seeking the payment of the sum of N2m he invested in one million ordinary shares of All States Trust Bank Plc with interest at the rate of 21 per cent per annum from August 2005.

Joined as respondents in the case were the Nigerian Stock Exchange, FBN (Merchant Bankers) Limited, BGL Securities Limited, Ecobank Nigeria Plc, First Bank of Nigeria Plc, United Bank for Africa Plc, and First Registrars Nigeria Limited – being regulators, issuing houses, receiving banks, and issue registrars.

In the alternative, Davies had asked for an order mandating the compulsory allotment to him of two million naira worth of shares of Ecobank Nigeria Plc at the present market value of the said shares.
The tribunal in the judgment resolved the issue of the status of the funds paid by subscribers for shares in a public offer where the shares were not allotted.

The applicant claimed that in August 2005, the All States Trust Bank Plc offered 10 billion ordinary shares for subscription on the NSE whereupon he invested N2m to buy one million units of shares.
He explained that while he was waiting for his share certificate or a refund of his money if his application was not accepted, he learnt that the CBN had revoked the banking licence of All States and appointed the NDIC to take over the bank.

The SEC, in its defence, stated that in order to protect the investing public, it issued a circular, dated October 4, 2005 to all issuing houses, receiving banks and issuer connected thereto to transfer all subscription money yet to be verified and approved by the CBN and the SEC to an escrow account opened by the CBN.
According to SEC, it initiated several efforts for the CBN and the NDIC to separate various subscribers’ funds paid into the escrow account of the CBN from the shareholders’ funds of the bank, but was frustrated by both the CBN and the NDIC. The two supervisory institutions rather decided to treat the fees as shareholders’ or creditors’ funds.

The Tribunal, led by Dr. Nnenna Orji, ruled that it was erroneous for the NDIC to infer that subscribers’ monies stashed in a separate account with the issuer could be treated as insured deposits of the bank prior to its liquidation, Ezea said in the statement.