Regulator punishes Kenya Power, Dyer for breach of rules

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Several brokers and investment banks were also penalised in various ways including fines and ordered to report more frequently.

A number of listed companies and brokers were penalised or reprimanded for breaching licensing rules, the latest Capital Markets Authority (CMA) annual report shows.

The regulator fined Kenya Power about Sh160,000 in January 2014 for late submission of quarterly report for the period ending September 30, 2013 as well as the half year. The date for the half year was, however, not specified in the CMA report covering up to June 2014.

Kapchorua Tea was issued with a cautionary note for late submission of shareholder returns for July 2013 contrary to the Capital Markets (foreign investors) Regulations.

TPS East Africa was reprimanded for delaying notifying the authority of the appointment of a director, which is against the Capital Markets Securities (Public Offers, Listing and Disclosures) Regulations 2002.

Express Kenya received a “public reprimand” for failing to publicise a profit warning 24 hours before announcing a significant fall in profit.

The monitoring of the market participants has been made easier by the fact that the CMA is now using an online reporting system and is promptly alerted when a market participant does not take specified actions within a given time frame.

“With the introduction of the on-line reporting through Risk-Based Supervision System, the authority has continued to engage the market to ensure that all reporting obligations are met on timely basis,” said the CMA annual report.

Many of the market participants escaped with a reprimand, which the CMA said is a legitimate sanction under the law.

“A reprimand is one of the sanctions the CMA can take. But the form such a reprimand takes is not defined in law, so they are mostly sent to the intended party,” said Antony Mwangi, head of corporate communications at the CMA when asked where the public reprimand was made.

The regulator said it carried out surveillance in the course of the year in line with best practices. It also conducted an annual and a mid-year inspection of the intermediaries on the basis of risk posed by each.

Several brokers and investment banks were penalised in various ways including fines and ordered to report more frequently. Renaissance Capital was accused of failure to comply with corporate governance requirements and ordered to ensure that the contraventions were fully redressed by last May.

Dyer and Blair Investment Bank was accused of unauthorised sale of shares belonging to Naftali Kairu Ngure. The CMA said it reprimanded the firm and told them to deposit Sh121,475 in the client’s account no later than May 20, 2014.

The company was also found to have a deficit in liquid capital and directed to submit reports for three months providing an update of the actions it had taken to prevent a recurrence.

NIC Capital was accused of having a capital deficit contrary to legal requirements and ordered to remedy the situation. The amount of the deficit was, however, not disclosed.

African Alliance Investment Bank faced three charges: that it had failed to appoint a risk management officer and a compliance officer as well as allowed a liquid capital deficit.

The CMA asked the company to submit reports for three consecutive months providing a clear update of the actions taken and the actual progress made based on the charges levelled against it.

Suntra Investment faced the charge of lacking adequate liquid capital and failure to regularly reconcile client records. It was asked to submit monthly reports providing an update on the actions taken to remedy the situation.

Tsavo Securities, whose former managing director Fred Mweni, is embroiled in court cases, was accused of participating in fraudulent bond transactions and was directed to submit its internal control procedures showing steps it had taken to prevent recurrence.

The firm was also ordered to take disciplinary action against officials found to have been personally involved in the fraudulent transactions.

Apex Africa Capital was accused of participation in fraudulent bond transactions and ordered to submit its detailed internal control procedures as well as other measures similar to those imposed on Tsavo Securities.