CMA Board Chairman Kung’u Gatabaki says the enforcement actions taken against the individuals and entities involved were informed by investigations by the authority, which have been going on for the last ten months/FILE
The actions range from reprimands and disqualification to recovery of financial gains made from the fraudulent sale of the government securities.
CMA Board Chairman Kung’u Gatabaki says the enforcement actions taken against the individuals and entities involved were informed by investigations by the authority, which have been going on for the last ten months.
“The board of the authority had taken the stern enforcement action to ensure that the highest standards of governance and transparency are observed in the capital market industry by all players,” he stated.
Gatabaki explained that all the people adversely mentioned were given an opportunity to be heard before the board determined the action to be taken.
Among those facing action include Fredrick Mweni, the immediate former Managing Director of Tsavo Securities, who has been disqualified with immediate effect from appointment as an employee or a director of any listed company or licensed or approved person, including a securities exchange in the capital markets in Kenya for a period of 15 years.
The authority had in December 2012 disqualified Mweni from appointment and service as a director of any listed company or licensed or approved person in the capital markets in Kenya, with effect from December 21, 2012.
“This was due to his failure to provide information to the authority during its conduct of investigations into the fraudulent creation and transactions of the subject fixed income securities and failure to comply with the authority’s directives in his capacity as the principal officer of a licensee (Tsavo Securities Ltd),” Gatabaki revealed.
Bokole Masha, a director of Tsavo Securities, has also been disqualified with immediate effect from appointment as an employee or director of any listed company or licensed or approved person, including a securities exchange in the capital markets in Kenya for a period of 10 years.
Tsavo Securities has also been required to surrender the capital gains worth Sh3.85 million, earned from purchase and sale of the alleged discounted fraudulent bonds by Mweni and Masha.
The surrendered amount is to be paid into the CMA Investor Compensation Fund.
Tsavo Securities Limited has also been reprimanded for failure to conduct its business efficiently with the appropriate integrity and professional skills as a licensed investment adviser.
The company’s license has also been restricted to the conduct of the investment advisory business with the requirement that it does not conduct any other business.
The members of the board of Tsavo Securities Limited have been reprimanded for their failure to implement effective oversight over the company’s operations and the activities of its key employees.
Brian Muchiri, an Associate Director and Head of Fixed Income Trading at Apex Africa Limited, has also been disqualified from appointment as an employee or director of any listed company or licensed or approved person, including a securities exchange in the capital markets in Kenya for a period of seven years.
Muchiri has also been required to surrender the capital gains worth Sh3.74 million earned from the purchase and sale of the fraudulent bonds.
The surrendered amount will be paid into the CMA Investor Compensation Fund.
Apex Africa Limited is also required to surrender commissions earned from the transactions amounting to Sh58,000 to the CMA Investor Compensation Fund.
The Board of Directors of Apex Africa Capital has also been reprimanded for failure to have effective oversight over the company’s operations and on its key employees.
CMA has also disqualified Moses Muregi, Assistant Manager, Monetary Operations and Debt Management at Central Bank of Kenya, Duncan Weru, Director Manline Telecommunication Services and James Wambugu, also a Director Manline Telecommunication Services from appointment as employees or directors of any listed company.
“The board also intends to strengthen oversight and supervision of licensed market players to enhance compliance with all laid down regulations,” Gatabaki said.
He disclosed that the authority will also require market intermediaries and approved institutions to report staff changes as material information available to the public to avoid instances where ‘rogue’ employees move from one institution to another.
The authority has called for further investigation into the circumstances surrounding the fraudulent creation and sale of government securities in respect to specific persons adversely mentioned in the Investigation Report but whose culpability could not be ascertained.
The authority has also forwarded the investigation report to the Director of the Criminal Investigations to pursue any alleged criminal conduct.
