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By Chinwendu Obienyi and Chukwuma Umeorah
Concerns are mounting among investors as Zichis Agro-Allied resumes trading, with many worried that the lack of clear communication from regulators could open the door to market manipulation. Investors and analysts insist that the quiet lifting of the firm’s suspension has created uncertainty, leaving room for speculation and possible price distortions.
They also said that lack of critical disclosures could ultimately erode confidence in market oversight.
Zichis’ shares were suspended on February 23 following an extraordinary 772 per cent price surge within a single month, a rally that raised red flags among traders and regulators over possible market manipulation.
The company’s share price had moved to N17.36 from its listing price of N1.81 on January 20, a move that prompted NGX Regulation Limited to intervene.
However, a market bulletin issued by the exchange’s head of issuer regulation department, Godstime Iwenekhai, said that the NGX said its investigation had been concluded and that “appropriate corrective measures” were taken to safeguard market integrity.
The exchange said the measures were consistent with its mandate to promote a fair, orderly and efficient market. However, it provided no details on the findings, whether any infractions were established, or if sanctions were imposed.
The silence, according to some market operators, has proven contentious and sparked a debate over the exchange’s integrity to protect investors.
Most of the operators who spoke to Daily Sun via telephone calls on the condition of anonymity because of the sensitivity of the development, said the development also places the spotlight on the Securities and Exchange Commission (SEC), the apex regulator of Nigeria’s capital market, amid expectations of stricter enforcement and greater disclosure. Market participants who spoke to Daily Sun on the development expressed divergent views on the exchange’s handling of the matter, with some defending existing internal processes, while others warned that limited disclosure could weaken investor confidence and market transparency.
The NGX had suspended trading in Zichis Agro-Allied on February 23 after the stock recorded an estimated 772 per cent increase within a month, an unusual movement that triggered regulatory scrutiny. The Exchange on March 23 subsequently announced that its investigation had been concluded and “corrective measures” implemented, leading to the lifting of the suspension, but did not provide details on the findings or actions taken.
Speaking on the issue, a market operator and Chairman of Highcap Securities, David Adonri, defended the Exchange’s approach, stating that investigations of this nature are often handled through internal regulatory channels where no clear rule breach is established.
“Information management is very important. The authorities will always weigh the benefits of proper information management against the risk of losing certain critical information to ensure that the trust and integrity on which the capital market is built is sustained,” he said.
Adonri explained that the investigation was conducted by the Exchange’s regulatory arm, NGX RegCo through administrative proceedings, noting that such matters are typically resolved internally unless criminal liabilities arise.
“There are administrative proceedings units that investigate under Nigerian Exchange Regulations Limited, and then upon the completion of their investigations, those who may be culpable will be given fair hearing, and then when decisions are taken, they are communicated to those people and other relevant stakeholders internally, because they are internal issues,” he stated.
According to him, the outcome communicated to market operators indicated that no trading rules were breached and that the issuer was not culpable.
“In this case, the issuer is completely exonerated because the issues that were involved were related to irregular trading in the security, which is a market activity, not coming from the issuer,” he said.
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He attributed the sharp price movement largely to market dynamics, particularly supply constraints and heightened demand.
“It was a case of excessive demand and trading in the securities. The little that was released into the market was not enough to meet the demand,” Adonri added, describing the episode as “a market failure” driven by limited free float and strong investor appetite.
He further noted that the experience highlights the need for improved regulation going forward to ensure better share distribution in listings by introduction to avoid similar price distortions.
There are also concerns that insufficient disclosure could affect investor perception, particularly among retail participants who rely on regulatory signals to make informed decisions.
Although the exchange has indicated that corrective measures were implemented, investor representatives expressed concerns over the absence of detailed public disclosure, arguing that transparency is critical to maintaining trust.
National Coordinator of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said the price movement lacked sufficient fundamental justification and should have prompted clearer communication from the Exchange.
“The market price, of Zichis was growing too fast. They listed at N1 per share, before you know it, the price had risen to over N7.00. There was a force driving the price. What’s was that driving force? That’s why the NGX slammed them with the suspension,” he said.
Okezie questioned whether the company had provided any material information to justify the rally, noting the absence of dividend payments or publicly available financial results that could support such valuation.
“If the company is doing very well, they ought to have filed the results or necessary disclosures to the NGX, did they do this, we do not know,” he added.
Not satisfied with the outcome, He maintained that the NGX should have disclosed the specific infractions or concerns identified during its review to guide investors and deter future occurrences.
“They should have disclosed that very infraction they committed, so people would know. If you don’t make it public, it might happen again in the near future. However from an investor standpoint, I don’t believe this will have any adverse effects or affect future investments decisions.” Okezie said.
A portfolio manager at a leading asset management firm, questioned whether the market is adequately protected from insider abuse.
“The scale and speed of Zichis’ rally, up 772 per cent in weeks, has been widely interpreted as a potential indicator of coordinated trading activity. Without a clear account from regulators, speculation will definitely fill the gap”, he said.
He warned that the fallout could extend beyond a single stock. “There could be erosion of trust or confidence from foreign investors, volatility in speculative stocks and moral hazard. I just think that the market could be troubled if the NGX does not disclose full details of what happened”, he stated.
While the exchange insists corrective steps have been taken, stakeholders say restoring confidence will require more than assurances and will demand openness.
Until then, the question of what really happened will continue to linger across financial markets.
