Another Kenyan broker in the red

February 5, 2010
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, NAIROBI, Kenya, Feb 5 – Ngenye Kariuki and Company stockbroker has been placed under statutory management for a period of six months.

The Chief Executive of the Capital Markets Authority (CMA) Stella Kilonzo said the broker has for sometime now failed to comply with the legal and regulatory provisions as outlined in the Capital Markets Authority Act necessitating the action.

“While efforts have been made to restructure the company, these have not borne significant fruit and as a result, no significant progress has been made. The Board of the Capital Markets Authority has resolved to place Ngenye Kariuki and Company Limited under statutory management,” a statement from the regulator said.

Mrs Kilonzo said the measure had been taken to safeguard investors’ interests as well as give the brokerage firm which has been facing liquidity problems ample time to put its house in order. The firm was operating under an ‘extended license’ after the regulator gave it time to comply with its licensing regulations.

“This statutory management action has been taken to ensure an orderly approach to addressing the challenges facing the company and to give the company a chance to revive its business,” she said.

In addition, the action will provide Wycliffe Shamiah who has been appointed the Statutory Manager with the opportunity to trace and preserve any assets of the company that may be applied to compensate investors with proven losses. Mr Shamiah will be expected to assume the management, control, and conduct of the affairs and business of the firm.

“Shamiah will be communicating detailed guidance to the investors, customers and creditors of Ngenye Kariuki on the procedures to be adopted for making claims in addition to the mechanisms to facilitate the transfer of CDS accounts of those investors who desire to effect trades in the near future,” Mrs Kilonzo advised. 

All parties concerned have been requested to give the Statutory Manager up to March 1 to enable him to familiarise himself with all aspects of the company prior to forwarding any claims or lodging any requests for transfer of CDS Accounts.

Ngenye Kariuki now joins Nyaga Stockbrokers and Discount Securities whose management was placed under the Capital Markets Authority.

Should it fail to meet its contractual obligations, clients who have invested in the Nairobi Stock Exchange through the firm will be compensated from the Investor Compensation Fund.

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