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Ghana’s markets regulator revoked the licenses of 53 fund-management companies as many of them failed to return client funds.

“They have failed to perform their functions efficiently, honestly and fairly and in some cases are in continuing breach of the requirements under relevant securities laws,” the Securities and Exchange Commission said in a statement on its website Friday.

The revocations take effect immediately and include 21 fund managers that have already ceased operations, “absconding with clients’ funds,” the SEC said. The Registrar of Companies has been asked to petition the High Court to start winding-up proceedings against the fund managers, it said.

Ghana’s banking cleanup exercise between 2017 and August this year caused panicked withdrawals at bailed-out lenders and fund-management companies. The run affected managers’ ability to meet withdrawal requests as fresh inflows dried up. It also exposed risky investment practices, such as placements in unlisted bonds, direct private equity and related party deals amounting to about 5 billion cedis ($900 million), according to the regulator.

Read more on fund managers’ funds locked up

Among the sanctioned firms are Blackshield Capital Management Ltd., formerly known as Gold Coast Fund Management, and Ideal Capital Partners Ltd. A liquidator will work with the government to pay a capped amount to all affected investors to provide some relief, the SEC said. The court will decide issues of assets retrieval and liquidation.

Groupe Nduom Ltd., which represents the majority shareholders and founders of Blackshield, said it was disappointed that the SEC acted “without responding to the numerous requests to assist Blackshield in retrieving funds owed by various government of Ghana entities.” The company will continue to pursue legal action to retrieve the funds, it said Friday in a statement.

Ideal Capital managing director Elizabeth Tamakloe declined to comment.

(Updates with details of order, bank cleanup, comments starting in third paragraph)

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

To contact the editors responsible for this story: Andre Janse van Vuuren at ajansevanvuu@bloomberg.net, Dan Reichl, Michael J. Moore

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