Embattled gold dealership company, Menzgold, has sued the Securities and Exchange Commission (SEC) and the Bank of Ghana.
The company in its suit is seeking from the court an order directing the two institutions to stop interfering in its business.
Menzgold also asked the court to stop the Bank of Ghana and the SEC from publishing what it described as “derogatory notices” against its business.
“An order of perpetual injunction to restrain the Bank of Ghana and Securities and Exchange Commission, its officers, servants and agents from interfering with Menzgold’s business activities or further acts of disobedience and non-compliance with law by publishing any derogatory notices.”
Menzgold also wants the two institutions to publish an unqualified retraction and apology for the notices they published against the gold dealership company.
It also wants the court to tell both the central bank and SEC that it’s gold dealership business does not fall under any of their laws.
“A declaration that the plaintiff’s business does not fall within the present legislated scope of the Banks and Specialised Deposit Taking institutions Act 2016 (Act 930). A declaration that the plaintiff’s business does not fall within the present legislated scope of the Security Industry Act, 2016 (Act 929),” the company stated in its writ filed by lawyer Kwame Boafo Akuffo from the Kwame Akuffo & Co. Unlimited law firm.
Menzgold says it has decided to litigate the matter at the court because the regulatory bodies have threatened to continue with their action against it “unless restrained by an order of this court.”
Background
Menzgold Ghana Limited was asked to suspend its gold trading operations with the public by the Securities and Exchange Commission (SEC).
According to the SEC, Menzgold has been dealing in the purchase and deposit of gold collectibles from the public and issuing contracts with guaranteed returns with clients, without a valid license from the Commission.
Securities and Exchange Commission
This, the SEC says, is in contravention of “section 109 of Act 929 with consequences under section 2016 (I) of the same Act.”
The company was however cleared to continue its “other businesses of assaying, purchasing gold from small-scale miners and export of gold.”
Although the company was adamant at first, it subsequently complied with the directive.
Menzgold hires UK law firm to battle SEC
Menzgold has also hired an international law firm, Baker & McKenzie LLP, as it prepares for a legal confrontation with the Securities and Exchange Commission over the issue.
In a letter to the SEC and the Minerals Commission sighted by citinewsroom.com, the London-based legal firm informed the two regulators that it had been contracted by the gold trading company to represent its interests.
It subsequently extended the suspension to September 28, 2018.
A statement from the company said its gold vault market product services will continue to be suspended to enable Menzgold reach a conclusion with the regulator.
Speaking to Citi News, Head of Communication at Menzgold Ghana Limited, George Quaye, said the latest postponement was due to an inconclusive meeting with the Securities and Exchange Commission.
We can’t pay dividends due to SEC’s action – Menzgold
Menzgold subsequenetly said it’s unable to pay its customers matured dividends on their gold investments due to the action taken against it by the SEC.
According to Menzgold, the SEC’s directive makes it impossible to make any payments.
“The gold collectibles offered for trade by patrons of our gold vault market product are subjected to our quality controls and traded for profit which is shared as extra value with the product owner or trader. Any act, order or instruction, therefore, designed or decreed to forbid Menzgold from trading makes it impossible to generate any revenue whatsoever out of which extra values are charged and paid to those entitled,” Menzgold said in a statement dated September 25, 2018.
‘We’re still not getting vital information from Menzgold’ – SEC
But SEC indicated that it is yet to hear from Menzgold after it ordered the suspension of its gold trading business.
Speaking on the Citi Breakfast Show on Wednesday, Paul Ababio, Deputy Director-General at SEC, said that the flow of information from the gold dealership firm to enable the two parties reach a favourable consensus has not been smooth.
“We may have finished with our investigation but actual implementation of the results of that investigation is also subject to their willingness to cooperate because we requested for information in August; we have sat with their lawyers with a few back and forth, and we still haven’t received information from them. So if we have the information, one might say within a matter of weeks we should have some closure; then the question now becomes the action items arriving from that determination,” he added.
Citinewroom