Franklin Management has about 600 active files and dormant investment accounts worth an estimated Sh350 million ($4 million) at present market value.
After having disputes with the regulator for more than a year, MD Andrew Franklin said he had decided to quit the local investment advisory business.
Correspondence between the firm and CMA seen by the Business Daily indicates that the regulator has set November 18 as the inspection date of the company’s premises. Mr Franklin said the company would develop an orderly phase-out plan and close by end of February.
Financial advisory firm Franklin Management Consultants (FMC) is set to close operations next February, marking the end of long-running disagreements with the capital markets regulator.
Franklin Management has about 600 active files and dormant investment accounts worth an estimated Sh350 million ($4 million) at present market value.
After having disputes with the regulator for more than a year, MD Andrew Franklin said he had decided to quit the local investment advisory business.
“The shareholders/directors of Franklin Management Consultants Ltd will not be submitting an application for renewal of an investment advisor licence for 2014,” said Mr Franklin in a letter dated October 23 and sent to Capital Markets Authority (CMA) acting CEO Paul Muthaura.
Mr Franklin said in an interview that most of their clients were foreigners.
Correspondence between the firm and CMA seen by the Business Daily indicates that the regulator has set November 18 as the inspection date of the company’s premises. Mr Franklin said the company would develop an orderly phase-out plan and close by end of February.
“With immediate effect FMC will not solicit any new commissionable business from new clients — to include dormant accounts — and will develop an orderly phase-out plan to ensure that FMC clients’ policies are not lapsed or otherwise disadvantaged. I anticipate completion not later than February 28, 2014,” said Mr Franklin.
However, Mr Franklin protested CMA’s order to subject his company to an inspection ahead of closure as it carries the implication that he may have committed some professional malpractices.
“The authority will conduct a close out inspection of FMC to review the status of your clients’ transactions, examine assets maintained on behalf of the 600 active and dormant clients as well as liabilities arising thereof,” said CMA director of market operations Wycliffe Shamiah in a letter to FMC dated November 12.
Independent directors
Mr Shamiah said CMA officials Halfan Mkiwa, Edwin Ongera and Lilian Misoi would conduct the inspection. Mr Shamiah asked FMC to make available all documents and records required for the exercise.
Earlier in the year, CMA gave FMC an extended licence for this year but declined to renew it fully as the firm had failed to comply with a directive to appoint independent directors and a chairman as well as raise its capital base.
Mr Franklin has maintained that the firm and number of clients was so small that it made sense to exempt it from the CMA-recommended bureaucracy and associated costs.
“In view of the existing situation concerning the application for renewal of FMC 2013 licence, we see no reason to pursue this matter any further,” said Mr Franklin in the October 23 letter.
