In the wake of legal action by Eurobond investors against some Ghanaian commercial banks over the impact of the Domestic Debt Exchange Programme (DDEP) on their investments, Former Director-General of the Securities and Exchange Commission (SEC), Dr. Adu Anane Antwi, has underscored the critical need for investors to thoroughly scrutinize investment prospectuses before committing their funds.
An investment prospectus is a formal document that provides essential details about an investment opportunity, typically issued by a company, government, or financial institution when offering securities like stocks, bonds, or mutual funds to potential investors.
It outlines critical information such as the company’s financials, risks, objectives, terms of the investment, and how funds will be used.
Dr. Antwi stressed that investment decisions must be based on a full understanding of the terms outlined in prospectuses, as these documents contain crucial information about potential risks and rewards. He noted that while regulators mandate full disclosure from issuers, many investors fail to read and analyze the documents, instead rushing to sign subscription forms without due diligence.
Investors require information to make informed decisions. Sometimes the issuers will think that the regulator is forcing them to disclose their own assets. That is what is required so that they will base their decision on the information available,” the former Director-General of Securities & Exchange Commission indicated.
He lamented that many investors often neglect to read prospectuses even when the information is available. He said, “Sometimes people don’t read the information even though the information is provided for the investor. In many cases, people will just, if there is a prospectus, they will just turn to the end page where the form, the subscription form is there and then they will just fill, sign, and purchase the shares.”
On the ongoing suit against the commercial banks, he pointed out that if the investors can prove that the advisors deliberately withheld crucial information that could have influenced their decision, there may be grounds for legal action. “If the information was available but not given to you by an advisor who was responsible for guiding you, then you may have a case against them for not acting professionally,” he noted.
“If you are able to prove that the information was with the advisor and the advisor did not give you that information for you to make informed decisions about what to do, then I am saying that you may be able to prove a case against the advisor for not acting professionally in that manner,” he noted.
The ongoing lawsuit against commercial banks by some Eurobond investors has reignited discussions about the responsibilities of financial intermediaries and the due diligence investors must undertake before making commitments.
With Ghana’s financial market evolving, experts caution that ignorance of investment terms can lead to severe financial losses.
