Arunma Oteh, who took over at the Securities and Exchange Commission in January, is battling to impose tougher oversight and increased disclosure to restore confidence in what was once viewed as a prime frontier market.

But some financiers who stand to lose lucrative trading licences are said to be applying pressure to thwart an SEC investigation aimed at establishing whether brokers misused investors’ funds and are in effect insolvent. Some financiers were seeking to use close ties to politicians to stall the investigation, suppress its findings or undermine Ms Oteh, allies said.

“These people are determined to undermine Arunma and to make sure that she stops,” said one Nigerian financier close to the SEC boss.

Some reformers fear such a blocking campaign could hamper Ms Oteh’s plans to name and shame some of Nigeria’s 300 brokers.One foreign banker said the brokers had a “tremendously strong lobby”.

Stocks on sub-Saharan Africa’s second biggest bourse fell by 70 per cent between its 2008 peak and the end of last year as a bubble inflated by banks’ rampant margin lending burst. The central bank was forced into a $4bn bail-out of nine lenders and fired the executives at eight of them amid allegations of widespread mismanagement. But brokers – sitting on estimated losses of at least $5bn – are still mired in mistrust, even though officials stressed that some of the biggest remain strong. A person involved in the reforms said: “It’s subtle and aggressive. They have agents everywhere, including those who are supposed to be supporting what we are doing.”

Ms Otehtold the Financial Times: “We need to get the bad eggs out of the system or both local and international investors will think every broker has a problem.”

A report for Ms Oteh by a team from the US Securities and Exchange Commission, parts of which were seen by the FT, found “a startling lack of oversight” by both the Nigerian SEC and the Nigerian Stock Exchange authorities.

African analyst is concerned that we will see another 70% drop if these controls and oversight regimes are not put in place. Brokers and or Bankers must understand that profit can still be made with good rigorous oversight. Oversight that is effective at pointing out potential issues and holding firms accountable if Nigeria is to become a player in the Global Market place. We applaud Mrs. Oteh for bringing experts from the US SEC to provide an unbiased analysis and report on the state of affairs at the SEC.