Regulating cross-border securities advertisement in the comesa region—some gaps in the law

Foreign Portfolio Investment (FPI) flows to Sub-Saharan Africa—in form of listed equity—have been steadily increasing over the past decade. Despite this positive outlook, evidence shows that most equity funds for Sub-Saharan Africa are located in South Africa and restrict their investment to that jurisdiction. An efficient legal framework for efficient advertisement of securities across international border—a legal framework that facilitates cross-border advertisement of securities to a larger section of the investing community—could serve to increase the competitive edge of COMESA securities markets as they compete with other markets for portions of FPI inflows to Sub-Saharan Africa. An efficient legal framework for cross-border securities advertisement could also give a competitive edge to COMESA frontier securities markets against those markets which are located within South Africa—such as the Johannesburg Stock Exchange. The article examines the legal framework for the public distribution of securities across international borders so as establish whether or not it has provided adequate incentives for efficient advertisement of securities across international border and protection of investors. The research employs a doctrinal approach drawing upon both primary and secondary sources of data. The main finding of the research was that the legal framework for the public distribution of securities across international borders has not provided adequate incentives for efficient cross-border advertisement of securities and investor protection. In particular the article shows that (i) although the legal framework permits cross-border securities advertisements, it does not provide an international passport to multiple region-wide cross-border securities advertising thereby increasing costs for licensees and hindering the growth of cross-border securities advertisement, (ii) although the legal framework empowers the SEC to commence representative civil action for and on behalf of injured investors, the power of the SEC does not extend to causes of action arising in connection to securities advertisements thereby compromising investor protection.