Claims of insider trading emerge at CMC case hearing
Peter Muthoka, ousted Director (left) Bill Lay, Managing Director (right).
The capital markets regulator is investigating claims of insider trading in shares of troubled motor dealer CMC on the Nairobi Securities Exchange (NSE).
The Capital Markets Authority (CMA) has not disclosed details of those being investigated. But it has indicated that it will conduct a forensic audit of the motor firm.
Insider trading involves the buying and selling of a company’s stock or other securities like bonds or stock options by individuals with potential access to information about the firm and which is not in the public domain. It is regarded as a criminal offence in the stock market.
The information is contained in a petition filed by Andy Forwarders challenging CMA’s powers to stop an extraordinary general meeting called by ousted CMC chairman Peter Muthoka.
Andy Forwarders, through lawyer Fred Ojiambo, yesterday told Lady Justice Mumbi Ngugi that the regulator’s motivation to oppose the meeting was because “it is conducting a forensic audit into the operations of the company.”
Enjoined in suit
CMC was also enjoined in the suit as an interested party and directed to file and serve relevant court papers ahead of the inter-partes hearing on November 9.
CMA chief executive Stella Kilonzo, according to the petitioner, revealed that the motor dealer would be investigated in relation to dealings in shares at the securities exchange.
“CMA says it is in the process of undertaking investigations into the operations of CMC and in dealings with the firm’s shares on the NSE, including insider trading and breach of the regulator’s requirements,” submitted Mr Ojiambo.
The regulator has not filed papers responding to the petition, but its lawyer Azul Alibhai of Anjarwalla and Khanna Advocates opposed the petition and accused Mr Muthoka’s lawyer of failing to disclose to the court the purpose of holding the EGM on November 21.
“Mr Ojiambo says the purpose of the EGM is designed to change the composition of the board of directors. But one of the directors is under the regulator’s watch on accusations of financial impropriety,” Mr Alibhai told the court.
Mr Muthoka, the single largest shareholder in CMC with 24.7 per cent of issued shares, has accused CMA of violating his rights and power to requisition and hold an EGM by virtue of Section 132(1) of the Companies Act.
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