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City-Code limited and Engr. Johnson – a matter of Trust

Posted Wednesday, July 23, 2008

- sells off shares without clients consent

Share Support Services
Proshare NI

July 22, 2008 at 17:54 GMT

The call was a frantic one – ‘Help me as I am at Escravos, Delta State and cannot make it. I have tried to call my brokers for days without success. My text messages have equally not been responded to. Kindly do something to help me as I have not given any instructions to trade in my shares but received a trade alert informing me of movements in my CSCS account’.

This phone call was followed by a mandate requesting that we represent the callers interest and liase with the Stockbroking firm that he desperately could not reached.

An investigation was launched and the findings is as presented.


City-Code Trust & Investment Company Limited, Member of the Nigerian Stock Exchange (NSE), when visited was unable to clarify the sales of 10,000 units of First Bank of Nigeria’s Plc (FBN) shares of Engr. Johnson, a client.

Proshare NI sought to clarify the true situation of the sales of the FBN shares by City-Code Trust & Investment when it visited its office on Davies Street off Marina Street in Lagos Island.

Ajao Oluniyi, Deputy General Manager (DGM) of the company affirmed that the investor might have sought a loan from the company; and was therefore given based on his personal recognition.

Further enquiries by Proshare NI made him phone the Warri Delta State branch of City-Code Trust & Investment to confirm the true status of the sales of the 10,000 units of the FBN shares.

However, his colleague in the Warri branch whom he gave a directive to investigate the case; with instructions to get back to him could not do that immediately.

Oluniyi later affirmed to Proshare NI that the said client gave a mandate that FBN shares should be bought on his behalf by the Stockbroking firm, but complained that the price at which the shares was bought was higher than he expected.

He further affirmed that based on the client’s complaint City-Code Trust & Investment decided to sell off the shares.

“He complained that the amount we bought the FBN shares he mandated us to buy was higher than expected; therefore what does that suggest, we decided to sell it off” Oluniyi said.

However, a mail the client sent to Proshare NI suggests nothing of such, the investor in his mail confirmed that he just got an alert on his cell phone for the sales of 10,000 units of FBN Plc.

“This transaction I did not authorise. I never gave such instructions to sell any of my equity or shares much more my FBN shares” the client said.

Furthermore, the investor confirmed that the FBN shares were traded on July 16, 2008 by City-Code Trust & Investment. “As at July 20, 2008, the 10,000 units of FBN traded on July 16, 2008 without my authority is yet to be reverted” the client affirmed.

The client also affirmed that his 200 units of NEM Insurance Plc shares were sold on July 01, 2008 without his instruction.

The client however appealed to Proshare NI to help furnish him with the phone numbers of the Nigerian Stock Exchange (NSE) and the Securities & Exchange Commission (SEC) in order to help stop such transactions.

As at the time of filling in this report, there has not been an established position for resolution. We intend to see this through and use the case to highlight issues about practices, mandates and relationship imperatives between a broker and his client so that investors are aware of their rights as well as their obligations.