The Investor Protection Fund (IPF), a creation of the Securities and Exchange Commission of Zimbabwe (SECZ) is established in terms of Section 86B of the Securities and Exchange Act (Chapter 24:25) (Act), which was inserted through Securities Amendment Act (Number 2) of 2013, is playing a key role on in protecting local investors.
The IPF provides compensation to protected investors who have suffered losses as a result of a licensed contributor to the IPF being unable to meet its liabilities. This failure might be due to insolvency, malpractice or other cause.
If an investor makes an investment through a financial intermediary who is not a licensed contributor to the IPF, that investor is not protected.
The IPF is administered by Comarton Consultants (Private) Limited (Comarton), whose main role is to provide efficient and professional secretarial, accounting, administration and other technical services to the IPF. The IPF does not have a full time secretariat of its own, and all services necessary for the smooth running of the IPF are therefore outsourced.
Comarton co-ordinates a number of service providers such as asset managers, investment consultants, custodians and auditors, who perform various tasks required by the IPF. Comarton ensures that the service providers adhere to their respective service level agreements.
Claims are submitted to the IPF through Comarton. Comarton then notifies the IPF board before the claim is handed over to SECZ for thorough investigations. When the investigation is complete, SECZ submits its findings to the IPF board for evaluation and judgment.
Wherever necessary, the board may seek the services of legal counsel to ensure that all loose ends are tied before communicating its position to the claimant. If the IPF board is satisfied that the loss suffered by the protected investor is a result of the insolvency of, or malpractice by a contributor, the claimant is paid an amount not exceeding 10% of the total amount of the fund’s assets within three months. This compensation is paid by bank transfer in local currency, as pronounced by the government.
In the event of multiple claims, the amount paid to each protected investor will be reduced proportionately.
Claims submitted twelve months after the malpractice or insolvency may be rejected, unless there is a valid explanation for the delay. Where the protected investor is responsible for their loss or if the claim is found to contain material inaccuracies or omissions, the claim will be rejected outright.
Members of the public can find information on the IPF at www.seczim.co.zw/investor-information/investor-protection-fund or contact the fund administrator, Comarton Consultants (Pvt) Limited.