The association of “protection levies” with the mob is as old as Eve in the crime world. On the market, investor protection fees are paid in the event of a financial mishap. But the Securities Commission of Zimbabwe is taking it a bit literally. This is because the commission has been approaching stockbrokers and demanding “investor protection fees”. Never mind, the fact that brokers already have an investor protection fund administered by the Zimbabwe Stock Exchange (ZSE). ZSE chief Emmanuel Munyukwi is very quiet as the commission reigns. So far, according to sources, the commission has collected US$2 million from some brokers.By the time ZSE finally got wind of the “protection fee” being paid out by brokers to the commission, millions were already sitting in a bank account. The commission’s deputy chairperson Arthur Charamba confirmed collecting levies from brokers but said his CEO would be in a position to comment further. “The matter has been referred to the CEO. I am not at liberty to comment on the legality of the matter,” he said. A ZSE note to brokers dated October 20 reads: “We advise that the committee of the Zimbabwe Stock Exchange disputes the legitimacy of the investor protection levy which was gazetted among other issues under statutory Instrument 206 of 2009. There is no provision in the Securities Act providing for any Investor Protection levy to be paid by anyone.“In fact under section 65 paragraph (V) of the Securities Act, the rules of the Zimbabwe Stock Exchange shall provide for “security to be provided by members for the discharge of any liabilities that may arise out of their dealings on the exchange”.Furthermore, the ZSE says “under section 121 paragraph (4) of the Securities Act the Zimbabwe Stock Exchange Security Fund is to continue in existence as body corporate which raises its own charges and levies.”The ZSE went on to advise brokers that the directive was confirmed at a meeting held at the Ministry of Finance by the former acting Registrar of the Stock Exchange. The ZSE added: “It is therefore not within the jurisdiction of the Commission to impose levy. The committee of the Zimbabwe Stock exchange has directed that all members continue to collect levy but not remit to the SEC until the matter has been resolved.” According to sources, the commission did not take it very well and decided to pay the exchange a “visit” and inspect the books of the ZSE Fund. They brought in an SEC official Tirivavi Nhundu to inspect the books as provided for by the law. As it turned out again, SEC misunderstood the law on that front as well. Only a person “registered as a public auditor” could inspect the books according to Securities Act Section 51(2).The story gets better.The would-have-been inspector —Nhundu was sacked years back from his job at the exchange for some reason. Even better.SEC chief Albert Chirume ran a broking firm — Momentum in the 90’s. The firm’s stockbroker left him and he could not get a licence to trade on the market. Despite efforts to engage the ZSE to get a licence, the ZSE is said to have turned a deaf ear to his pleas on the basis that he was not experienced.Momentum collapsed thereafter. Another commissioner Martha Rukuni had a dream some time back of being a stockbroker. The ZSE said no to her and now she is a commissioner in charge of controlling the stock exchange.Could there be a conspiracy theory? Maybe not. Just a series of coincidences.ZSE has been warned that “if it is found upon inspection referred to in subsection (3) that licensed person has not complied with section fifty or any relevant rules, the commission shall be entitled to recover the cost of the inspection from that person”. KPMG has been appointed by SEC as the auditors. Should there be anomalies Munyukwi and company will be fed to the sharks alive.
Chris Muronzi
