General News of Thursday, 13 September 2018
Menzgold has defied a directive from the Securities and Exchange Commission to stop trading in gold collectibles for operating without a licence.
Lawyers for the company, Kwame Akuffo and Co Unlimited have written to the Commission stating the “purported directive to shut down or suspend its operations untenable and is unable to comply”.
The September 7, 2018 directive to shut down comes after SEC met with Menzgold officials in August 2018.
Menzgold was in an August 27, 2010 letter from SEC given two days to respond to queries but the gold dealership company asked for two-weeks to respond.
Although the August 29, 2018 letter for extension was received, Menzgold officials say SEC was silent about its request for an extension.
When SEC finally spoke, it was to order the company to cease the aspect of Menzgold’s business which involves purchase and deposit of gold collectibles and guaranteed returns.
A move which Menzgold has described as “bad faith” and “an unhealthy over-reach”.
According to the Commission, the aspect engaged in by Menzgold is a capital market activity under Act 929 for which the company requires a valid license to operate.
To continue in this business, therefore “poses a threat to unsuspecting and uninformed investors,” SEC said.
But rehashing its position, Menzgold has insisted SEC does not have the legal authority to regulate their business.
Lawyers said Menzgold’s “sale of gold collectibles is not one that falls within your regulatory regime”.
The gold buying company has challenged the Commission to supply “provisions of the Securities and Industries Law that its business and objects fit into and what it requires for the purposes of a license if any”.
Kwame Akuffo and Co Unlimited also pointed out what it observed as contractions in the SEC directive.
The lawyers said while the SEC letter is headlined ‘notice to suspend trading without a licence’, the content calls for a business shut down.
Menzgold’s lawyers said this contradiction makes SEC’s “intentions difficult for our client to understand and comply with”.
The fight with SEC is the latest after Menzgold got into a fight with the Bank of Ghana in recent years.
BoG has been cautioning Menzgold to desists from “deposit-taking activity” because it breaches the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).
It also warned, members of the public do business with the company at their own risk.
Menzgold replied once again that BoG is not a legitimate regulator of its gold dealership business and said it had a licence from the Precious Minerals Marketing Company (PMMC).
PMMC joined the fight explaining that although it granted a licence to Menzgold in 2014 it had revoked it.
PMMC also explained, it grants licence to business to buy gold for export purposes. Menzgold, he said used to export gold but no longer has the licence to do so.
It is the third regulatory battle with SEC that has triggered a marked increase in panic withdrawals.
Joy News reported, at least 200 clients rushed to the company’s East Legon office to make withdrawals.
They were told to provide account details and expect transfers. Some clients are, however, unmoved by the latest controversy and remain confident in Menzgold’s business.