Fake Dangote IPO exposes gaps in Nigeria’s market reforms — EBC

The suspension of a fake Dangote Petroleum Refinery share offer by the Securities and Exchange Commission (SEC) has exposed the need for stronger oversight of Nigeria’s capital market as the country transitions to a faster trade settlement system, global brokerage firm EBC Financial Group has said.

In a statement issued on Monday, EBC said the incident showed that while Nigeria had successfully upgraded its market infrastructure by shortening the settlement cycle from three business days to one (T+1), greater attention must now be paid to the conduct of licensed market operators.

Senior Market Analyst at EBC Financial Group, David Precious, said the challenge was no longer the speed of trade settlement but ensuring that regulated operators complied with market rules.

“Completing a trade in one day instead of three makes the market run more smoothly. The trade-off is that it leaves less time to detect a fake offer before money changes hands. That is why verification must happen before investors part with their money,” he said.

The comments followed the SEC’s June 23 directive ordering licensed stockbrokers and digital investment platforms to stop promoting a fake initial public offering (IPO) allegedly linked to Dangote Petroleum Refinery and Petrochemicals FZE.

The commission said no application for an IPO had been filed or approved, yet some licensed operators had allegedly collected advance payments from investors. It directed the firms to halt all promotions, withdraw advertisements and refund investors within 24 hours, warning that defaulters would face sanctions under the Investments and Securities Act 2025.

EBC noted that the incident came shortly after Nigeria completed its migration to the T+1 settlement cycle on June 1, following an earlier move from T+3 to T+2 in November 2025.

According to the firm, while the shorter settlement cycle improves market efficiency, liquidity and aligns Nigeria with global standards, it also increases the consequences of misconduct by licensed operators.

The brokerage argued that the incident highlighted the need for stronger conduct supervision rather than further technological reforms, stressing that the weakness lay in the actions of regulated intermediaries rather than the trading system itself.

It added that investors often judge a market not only by its technology but also by the integrity of those operating within it, warning that misconduct by licensed firms could undermine efforts to rebuild investor confidence.

EBC also described the SEC’s enforcement action under the Investments and Securities Act 2025 as a significant early test of the country’s updated regulatory framework.

The firm urged licensed operators to ensure that no investment offer is promoted, subscriptions collected or accounts opened until such offers have received regulatory approval, saying stronger compliance standards are essential to complement Nigeria’s faster settlement infrastructure.