Nyaga investors to be paid by October

July 2, 2009

, NAIROBI, Kenya, Jul 2 – Investors who lost their money after the collapse of Nyaga Stock Brokers will be compensated to a maximum of Sh50,000 each by October this year.

Nairobi Stock Exchange Chief Executive Officer Peter Mwangi said out of the 28,000 shareholders who had invested with the now defunct stock brokerage only 3,000 had investments worth more than Sh50,000.

Mr Mwangi said the compensation process had been made possible after Treasury made amendments to the Investors Compensation Fund by removing limits placed on money that can be drawn from the Fund to pay investors.

“Previously the limits were imposed on the Fund and it could not pay out more than 50 percent of the Fund – that requirement has now been removed,” he said.

Mr Mwangi further stated that a cap that previously blocked payment of more than Sh5 million for a failed intermediary had also been scraped.

“Now that these changes have been gazzetted, this opens the door for compensation to take place,”Mr Mwangi said.

The NSE boss said these new changes will allow the Capital Markets Authority to pay out over Sh300 million to pay the 28,000 affected investors.

The Fund has 408 million worth of assets which means it will be left with slightly over Sh100 million after the compensation process is complete.   

Mr Mwangi however said that individuals who had invested through Discount Securities currently under receivership will have to wait a while longer for the completion of an ongoing audit.

Meanwhile, the CEO has attributed heightened trading at the bourse in the last three weeks to increased interest by foreign investors.

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