Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

CMA: Kenyan broker traded client cash

NAIROBI, Kenya, Feb 12- Preliminary investigations into the operations of Ngenye Kariuki and Company stockbrokers indicate that the firm was dealing in clients’ money.

Capital Markets Authority-appointed Statutory Manager Wycliffe Shamiah said on Friday that this was just part of the financial problems that the family-owned business was facing which resulted into the suspension of the broker from trading on the Nairobi Stock Exchange in November last year.

“Ngenye Kariuki had a lot of licensing issues which included a very negative capital, very weak financial base, there were instances of overdrawing from clients’ bank accounts and a very high bank overdraft beyond the stipulated regulatory requirements,” he said. CMA requires that stockbrokers have at least 10 percent of their paid up share capital in bank overdraft.

Although he declined to divulge finer details regarding the broker saying they were still carrying out their reviews, Mr Shamiah said initial reports show about 88,000 Central Depository and Settlement Corporation (CDSC) accounts.

Having moved into the company just a week ago, the manager who assumed control and management of the broker on Friday 5, said he was also unable to say whether clients were likely to loss their money.

“I just want to clarify that this maybe very different from the number of clients in the company because some of them may have more than one account. At time point I would not want to go into the valuation of shares for clients in Ngenye because we are still working on it. Within five days, it was not possible for us to do this but those are some of the things that we are looking at,” he said.

His remarks came a day after the Kenya Association of Stockbrokers and Investment Banks (KASIB) defended the firm arguing that CMA lacked the evidence to conclusively say that Ngenye Kariuki was unable to meet its continuing obligations to its clients. Instead, KASIB blamed the broker’s woes on the depressed stock market activity which had afflicted many of its members.

“There does however appear to be justified concern about the stability of the financing arrangements the firm has adopted to survive the lean market period and this may very well be the basis for what should then be termed as a pre-emptive action,” said the statement signed by KASIB CEO Jane Njeru.
 
The statutory manager however steered clear of commenting on KASIB’s claims only saying that they are looking at the broker’s internal structures and financials in a bid to get to the root cause.

He also expressed confidence that the company might resume its operations in the near future.

Advertisement. Scroll to continue reading.

“We are hopeful that within a very short time, all those issues will be addressed and that the company will have an opportunity to come back into operations.

Clients who have invested in the NSE through Ngenye are still transferring their CDS accounts to other brokers.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...