The Securities and Exchange Commission (SEC) has clarified that the delay in disbursing bailout funds to customers affected by Gold Coast Fund Management Limited cannot be attributed to the Ministry of Finance.
The SEC has emphasized that the Ministry of Finance has not been unwilling to provide the necessary funds, dispelling any notion of blame directed at the Ministry for the delay in payments.
It rather said in a statement that “The delay is principally due to the legal action by Blackshield/Gold Coast contesting the liquidation petition brought by the Official Liquidator (Office of the Registrar of Companies) at the request of SEC following the revocation of licences. The SEC will continue to support the Official Liquidator in pursuing the liquidation petition in court.”
The Securities and Exchange Commission (SEC) statement is in response to protests by clients of Blackshield/Gold Coast outside the Ministry of Finance.
On November 8, 2019, the SEC revoked the licenses of fifty-three (53) Fund Management Companies (FMCs) due to various regulatory violations, including their inability to return an estimated ¢8 billion to clients.
The revocation of licenses was executed in accordance with the SEC’s mandate to safeguard investors, uphold the integrity of the capital market, and mitigate financial stability risks.
Following the license revocations, the SEC implemented several measures to protect investors. These actions include notifying the Registrar of Companies/Registrar General to initiate the official liquidation of the 53 FMCs under relevant legal provisions, securing a government bailout package for affected clients of the FMCs under the condition that court-ordered liquidation is granted, and appointing an agent to secure assets, validate claims, and receive records from the affected companies in accordance with the Securities Industry Act.
The SEC has confirmed that, up to this point, ¢4.6 billion has been disbursed to clients of fund management companies. This includes ¢3.1 billion for Amalgamated Fund Tier 1 payments and ¢1.45 billion allocated to Amalgamated Fund Tier 2 payments. The partial bailout program also encompasses proactive payments of up to ¢50,000 to clients of Blackshield/Gold Coast and other companies whose claims were validated and hadn’t received winding-up orders from the Court by October 2020. A total of 73,541 claims amounting to ¢1.34 billion have been disbursed to Blackshield/Gold Coast clients under this partial bailout program, with 61,734 claims fully settled.
The SEC underscores that the complete disbursement of bailout funds is contingent upon claim validation and court-issued winding-up orders to guarantee that all claims are verified, and the companies’ assets and liabilities are transferred to the Office of Registrar of Companies.
According to the Corporate Insolvency and Restructuring Act, 2020 (Act 1015), as amended by the Corporate Insolvency and Restructuring (Amendment) Act 2020 (Act 1031), only a Court can grant a winding-up order. Therefore, the ongoing court process between the Office of the Registrar of Companies and Blackshield/Gold Coast is necessary.
As of now, the Office of the Registrar of Companies has received 44 winding-up orders from the Court, with only two outstanding, namely Blackshield/Gold Coast and Kron Capital Ltd.
The SEC further highlights that the liquidation petition is still pending in court, causing a delay in the government’s complete bailout program for affected clients.