Unless proactive measures are taken by stockbroking firms across the country, they may be plunged into operational crisis, owing to mass resignation of staff over “unrealistic targets” to bring in clients to invest in the stock market, The Point has gathered.
Already, a reasonable number of members of staff of the affected firms have either resigned or are planning to hand in their resignation letters by the end of the month. The Point gathered that majority of the resignees did so because the “conditions for surviving in the stock market were becoming more unbearable.”
Some of the affected companies include Cashcraft Securities, Edgefield Capital, FBN Securities, Alliance Capital and Allbond Investment. Others are Aims Asset Management, CBE Securities, Cradle Trust Finance and Securities, Enterprise Capital, Quantum Securities and Standard Securities.
Interestingly, top sources across the nation’s capital market told The Point that regardless of what many employees of stockbroking firms might be planning, there were strong indications that many of them might lose their jobs on or before the end of June this year as a result of the current economic recession that had adversely affected major indicators of the stock market.
Speaking with The Point, a staff of Cashcraft Securities Limited, who pleaded anonymity, said that the lull witnessed in the capital market had practically crippled stockbroking operations, as the management of many firms now mounted serious pressure on staff to get more clients or exit the company.
The staff, who works in the accounts department of the firm, disclosed that every staff in his department was given the task of bringing in at least 25 clients (with N10 million investment portfolio each) to the company on or before the end of June, or risk losing their jobs.
“It is becoming unbearable for me. I am an accountant and that is what I was employed as, how could the management give me a target, which means I have to go on the streets scouting for clients? This contradicts the labour law. I would rather quit and face my Uber cab business, which is less stressful,” he said.
Another staff of Edgefield Capital Management Limited, who has threatened to resign from the organisation at the end of the month, also lamented the development.
The staff, who works in the research unit of the firm, opined that his employers might have lost focus, adding that “giving non-business development staff a target of N2 million each is a misplaced priority.”
To him, such target, against the background of accumulated outstanding salaries since May 2016, is inhuman. He alleged that members of the company’s board of directors shared profit when the market was bullish, but were now transferring aggression by introducing unrealistic targets for junior staff when there is lull.
“The lull in the market has affected a lot of activities and eroded investors’ confidence, especially with foreign investors pulling out of the bourse. We have been collecting stipends since May 2016, and they still expect us to meet targets. Some of us already owe parts of children’s tuition fees, rents and are also being pressurised to convince people to bring their monies, which may not be enough, to the market.
It is unrealistic,” he told The Point. Another staff of another stock broking firm, FBN Securities Limited, who did not want to be named, disclosed that she resigned last week Friday because of a N50 million target given to her unit.
According to her, the development has led to the resignation of three out of eight members of the unit between October 2016 and January this year. She said, “My colleagues who earlier resigned had been queried twice for failing to meet their targets and in order to avoid being sacked, they resigned.
“We understand that the economy is bad and the company has to keep its head above waters, but the management is not considerate. Except it wants us to prostitute, the targets cannot be realised within the time frame, considering the state of the economy. I would rather join my husband in managing our school than die of high blood pressure.”
UNREALISTIC TARGETS AND MARKET OPERATIONS
But what impact will the pressure to meet targets have on the stockbroking firms and the stock market at large? The National Coordinator, Nigerian Constance Shareholders Group, Alhaji Mikail Shehu, warned that if care was not taken, the market might witness a recurrence of the 2008/2009 near crash.
He noted that a stock market in near crash or outright crash, “experiences sudden dramatic decline of stock prices across a significant crosssection of the market, resulting in a significant loss of paper wealth.”
Generally, crashes are driven by panic, as much as by underlying economic factors, but Shehu believes that the 2008/2009 incident was largely caused by the influx of several public offers introduced by commercial banks in a bid to raise their capital to N25 billion as instructed by the Prof. Charles Soludo-led Central Bank of Nigeria.
Shehu recalled, “At the time, banks pressurised their staff to meet several unrealistic targets given to them, and they went all out to convince people to buy the shares, promising huge returns on investment.
At the end of the day, a lot of people died after the near crash, because they could not cope with the shock. “The Securities and Exchange Commission should intervene before it is too late and ensure it curbs the approach of the firms.
One of them approached me trying to convince me to invest in the capital market, promising that I would make over 200 per cent RoI within six months. I know that is not possible, not with the present state of the economy.
But if I was a novice, and fell for such and market slipped further, what would have happened?” The President, Concerned Shareholders Association of Nigeria, Mr. Taiwo Oyetayo, is, however, disturbed that the ripple effect of the development can further erode investors’ confidence beyond imagination.
Like Shehu, he explained that the market was driven by forces of demand and supply, which were also determined by information. If shares are sold based on speculations that it will give a particular RoI within a period, Oyetayo said such would further pull down the major market indicators.
“Unlike the banking sector, the stock market is not a sector where people should be pressurised to meet targets, because if the pressure is unbearable, such staff may choose to deceive the potential investors, who may be gullible and put all their savings in the market.
That was what led to the mad rush for MMM, as people were attracted by high RoI. Our market is different and should be treated differently,” he told The Point.
FIRMS DEBUNK STAFF ALLEGATIONS
however, claimed that giving targets to staff was no longer in practice in the industry. Some of them, who spoke with The Point, denied the allegations by their members of staff.
For instance, the Compliance Officer, Cashcraft Securities, Mr. Damola Oduola, told The Point that his firm did not subscribe to such mean marketing strategy. According to him, what the firm does for its staff is to give them commissions based on the number of clients they were able to convince to invest in the market.
“We are a reputable organisation that does not put pressure on its stafto meet targets. We only give them commission on every client they bring,” he disclosed.
Efforts to get the response of FBN Securities proved abortive as the acting Managing Director, FBN Capital, Ms. Margaret Baale, failed to respond to calls and text messages sent to her mobile number.
Also, attempts to get the response of the Managing Director, Edgefield Capital, Mr. Oluseye Awaye, did not yield results as he failed to respond to telephone calls. A source in the company, however, said, “It all started when we requested for official cars after we made some profit last year.
Instead of responding to our plights, the MD instructed all departmental heads to give all members of staff outrageous targets, probably to put us on the Shehu edge.”
