(Bloomberg) -- Ghana’s markets regulator has blocked 21 money managers from accepting new funds as the Securities and Exchange Commission tries to retrieve as much as 9 billion cedis ($1.6 billion) of trapped investments.

The SEC is auditing money managers that may have breached its guidelines by placing clients’ money into illiquid investments. The firms struggled to meet investor withdrawals after a central bank overhaul that reduced the number of lenders by a third triggered a run on deposits that spilled over into investments, squeezing liquidity.

“We’ve asked them not to take new investments,” Emmanuel Ashong-Katai, head of policy research at the Accra-based SEC said in an interview. “Because they are under pressure, if they take, they might give it to the old investors.”

As much as 5 billion cedis are tied up in unlisted bonds, direct private equity stakes and other related party deals with small and medium-sized businesses, according to the SEC. Another 4 billion cedis is locked up in fixed-term investments with banks rescued during the clean up, savings and loans companies, and microlenders.

The SEC hasn’t yet released a list of all the fund managers it is investigating. An 11.2 billion-cedis bailout for lenders that were closed down and another of about 925 million cedis for microcredit companies whose licenses were revoked is helping to ease funds locked up in that segment.

To contact the reporter on this story: Moses Mozart Dzawu in Accra at mdzawu@bloomberg.net

To contact the editors responsible for this story: Alastair Reed at areed12@bloomberg.net, Vernon Wessels, Andre Janse van Vuuren

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