Blacklisted bond dealer seeks court’s reprieve over ban
Tsavo Securities Limited CEO Fred Mweni addresses a press conference after his ban by the Capital Markets Authority. Photo/SALATON NJAU
What you need to know:
Fred Mweni Wednesday filed an application for judicial review of his disqualification from running the company or being an employee of any Capital Markets Authority (CMA) licensee effective December 21.
The CMA said it had banned the dealer for blocking the investigation by refusing to disclose transaction details of suspect deals that were allegedly executed through his firm.
Mr Mweni, a former dealer at Suntra Investment Bank, is said to control a substantial portion of the multi-billion shilling Kenyan bonds market.
Blacklisted bonds trader Fred Mweni has turned to the courts in a bid to have a ban imposed on him by the capital markets regulator lifted.
Mr Mweni, the managing director of investment advisory firm Tsavo Securities, Wednesday filed an application for judicial review of his disqualification from running the company or being an employee of any Capital Markets Authority (CMA) licensee effective December 21.
“The action by the (CMA) is illegal, unjustifiable, unilateral and ultra vires and against the principles of natural justice,” he said in the application, adding the ban “will occasion irreparable harm” to him and Tsavo Securities since he is the principal officer of the company. However, the CMA said it could not respond to the application since it had not yet been served with the court papers.
Mr Mweni is described as a “key” part of the ongoing investigations into irregular trading of bonds that market insiders say are valued at billions of shillings.
The CMA said it had banned the dealer for blocking the investigation by refusing to disclose transaction details of suspect deals that were allegedly executed through his firm, but Mr Mweni has claimed that the regulator was forcing him to give confidential client information.
The court papers reveal that CMA is demanding information on transactions relating to the trading of three bonds identified as FXD 1/2012/5, FXD 4/2011/12 and FB 1/2011/12.
The regulator also wants Mr Mweni to disclose the authorised signatories of account used to trade bonds between July 30 and September 30, and copies of Tsavo Securities’ bank statements in the same period last year.
The regulator also wants a summary of all bonds owned by Tsavo Securities as at August 31 last year and all bonds transacted by the company in the same month and commissions earned from the trades.
The company is also required to provide a copy of the executed agency agreement with Kestrel Capital stockbrokers.
Mr Mweni, a former dealer at Suntra Investment Bank, is said to control a substantial portion of the multi-billion shilling Kenyan bonds market.
At a press conference last Friday, he claimed to have originated at least Sh135 billion of the Sh538 billion (or Sh270 billion of Sh1.076 trillion sales and purchases) of bonds done so far.
Last year, bonds worth Sh445 billion were traded at the Nairobi Securities Exchange, down from a record Sh483.1 billion reported in 2010. The market turnover stood at Sh538 billion as at the end of November.
Mr Mweni claims in the court papers that he learnt of the CMA ban through newspaper advertisement published on December 27, though it became effective on December 21.
He says the ban was “premature and unlawful” since he had pledged to submit the required information to the Authority at a meeting on December 5 also attended by the Tsavo Securities chairman Francis Muhindi.
The trader has applied that the matter be treated as urgent and is heard during the current court vacation.
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