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SECZ kicks out Interfin, Remo

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The Securities Commission of Zimbabwe (SECZ) has ejected two stockbroking firms, Interfin Securities and Remo Investment from operating at the Zimbabwe Stock Exchange (ZSE) after they were found guilty of breaching trading rules.

The capital markets regulator in March suspended Interfin and Remo Investment Brokers for six months to pave way for investigations following suspicions of irregular dealings and non-permissible banking activities.

The transactions emerged after Remo failed to recover the shares it had pledged as security after borrowing close to $2 million from Interfin Securities.

SECZ chairperson Willia Bonyongwe in a statement yesterday said: “Following the notification of the suspension of Interfin Securities in March this year and investigations carried out thereafter, the board of the commission unanimously resolved that Interfin Securities (Pvt) Ltd’s dealing firm licence be cancelled.”

The commission also revoked the two firms’ principal brokers’ licences of Rufaro Zengeni and Mohmed Mahmed after it deemed them“unfit” to function as securities dealers.

“The agency agreement executed by Interfin Securities and Interfin Banking Corporation was adjudged null and void, as it sought to achieve regulatory arbitrage through and by the two entities. This was meant to be done by enmeshing one’s activities into the other, mainly with the intention that the securities dealing firm could ‘properly’ offer banking services,” Bonyongwe said.

“The commission found the agreement to be a legal nullity on this basis, as it sought to ‘legalise’ illegal activities on the part of the dealing firm, in offering banking activities that fall under the Banking Act. These activities fall outside the Securities Act, in terms of which the dealing firm operates.”

On Remo, SECZ said: “The firm was supposed to carry out the activity for remuneration that bears a direct relation to the activity, in the capacity of an agent. Remo instead derived remuneration from on lending to third parties and or to its associates.

“Remo failed to prove that as a company it resolved to borrow to fund its operating gap, as was alleged.

Documentary proof in the form of minutes of the directors’ meetings would have sufficed in this regard.

“Remo further failed to demonstrate how borrowing from a fellow securities dealing firm, instead of a properly licensed banking institution, was legitimate
business.”

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