THE Administrative Court has upheld the decision by the Securities Commission of Zimbabwe (SECZ) to suspend Remo Investments Brokers, saying the broking firm engaged in illegal activities.
Remo had appealed to the court against the decision by SECZ to cancel its licence and that of its managing director Mohamed Iqbal Mahmed for five years after being found guilty of breaching provisions of the Securities Act.
According to court papers, Remo and Mahmed were cited as first and second appellant. SECZ was the respondent.
“Given the extent of the deviations from the expected standard of operating the registered securities exchange that have been outlined above the court finds that the respondent was justified in opting for cancellation of the first and second appellants’ licences (Remo Investments Brokers and Mohamed Iqbal Mahmed) with provision for re-application after five years if the two would have been adequately rehabilitated,” reads part of the judgment.
The matter arose after Remo failed to recover the shares it had pledged as security after borrowing close to $2 million from Interfin Securities.
This resulted in Remo seeking the intervention of the Zimbabwe Stock Exchange to pressurise Interfin to return the shares, which then prompted an investigation into the issue.
Proctor and Associates, which was tasked by SECZ to carry out investigations, found out that Remo did not record shares that were in question in the nominees register as required by the Securities Act.
However, Mahmed argued that the shares were not registered as they were not held by brokers in safe custody.
“But clearly, the first and second appellants did not keep a record of the shares in question,” the court said.
“They were not in the nominees register neither were they in the scrip ledger.”
Proctor and Associates in their report revealed that Remo Investments engaged in non-permissible activities, illegal activities and they used clients’ shares as security for loans, failed to keep register of all securities, false declaration, failed to conduct business with high standards of propriety and probity.
“Further to that, both Interfin Securities and the First appellant are securities exchanges,” the court said.
“One cannot borrow from the other and lend to the other. Either can borrow from a properly licensed banking institution . . .
“The court is satisfied that the respondent was correct in finding the first and second appellants guilty of contravening section 42 (1) of the Act, that is engaging in non-permissable activities.”