NAIROBI, October 13 – The Capital Markets Authority (CMA) on Monday appointed auditing firm KPMG to manage troubled stockbroker Discount Securities Limited.
CMA Chairman Professor Chege Waruingi said the regulator was invoking the CMA Act, following revelations of poor management at the stockbroker.
“It is through our continuing inspection of all licensees that it has come to our attention that Discount Securities Ltd has been experiencing corporate governance challenges,” said Prof Waruinge.
At a press conference attended by CMA Chief Executive Stella Kilonzo as well as Nairobi Stock Exchange (NSE) Chairman James Wangunyu and CEO Chris Mwebesa, Prof Waruingi announced that KPMG would act as Executive Managing Director, to replace David Githaiga.
He said KPMG would be expected to “restructure Discount Securities Limited (DSL) through strengthening its corporate governance structures to ensure its business continuity”.
The markets regulator was however categorical that it was not placing DSL under statutory management, but invoking Section 33A (1) c and (2) c of the Capital Markets Act.
The law allows the Authority to intervene in the interest of the investors, and may “appoint a competent person familiar with the business of the licensed person to its board of directors to hold office as a director who shall not be capable of being removed from office without the approval of the authority other than by order of the High Court.”
During the restructuring process, Prof Waruinge said, CMA will not revoke DSL’s licence.
“The firm will remain open and will continue trading at the Exchange under this arrangement until such a time that the Authority will determine,” he said, adding that CMA, NSE and DSL principals would also seek viable third parties to invest into the company.
Discount Securities Limited was awarded a stockbrokerage licence in 1995 and has grown over the years, opening more than 25 branches countrywide. Its website lists DSL directors as William Murungu (an accountant) as chairman; Allan Simu (architect) as a director and David Githaiga (economist) as Executive Director.