The Capital Markets Authority (CMA) is now collecting public views on the Capital Markets (Whistleblower) Regulations, 2021, which propose to award whisleblowers three per cent of the amount recovered subject to a maximum of Sh5 million.
The CMA introduced the award in amendments to the CMA Act in 2018, but the provision did not come into effect immediately, pending publishing of the supporting regulations.
The National Treasury has published regulations meant to guide the long-waited whistleblower award scheme that the regulator hopes will encourage reporting of malpractice in the country’s capital markets.
The Capital Markets Authority (CMA) is now collecting public views on the Capital Markets (Whistleblower) Regulations, 2021, which propose to award whisleblowers three per cent of the amount recovered subject to a maximum of Sh5 million.
The CMA introduced the award in amendments to the CMA Act in 2018, but the provision did not come into effect immediately, pending publishing of the supporting regulations.
These regulations also provide for witness protection for the whistleblowers, addressing a sticking point that has discouraged many from volunteering information about corporate fraud.
“A whistleblower’s identity and such other confidential information of the Whistleblower shall not be disclosed unless required by law or an order of the court….The Witness Protection Act shall be applicable to the protection of a whistleblower who qualifies for such protection as is prescribed under that Act,” read the regulations in part.
The CMA will bank on the scheme to promote investor confidence in markets by arresting irregularities such as share price manipulation, insider trading, cooking financial statements, breach of governance code and theft.
The markets regulator had earlier in 2016 put in place an online portal for people to report fraud, but after a year without receiving a single report, it changed tack and introduced the award scheme to encourage participation.
Other regulators and government agencies which offer awards for fraud reports include the Kenya Revenue Authority (KRA) which rewards those who report tax cheats five percent of the taxes or duties so recovered, or Sh2 million per case, whichever is less.
The Competition Authority of Kenya (CAK) pays those who report restrictive business practices like price fixing and rigging of tenders a reward of not more than one percent of the administrative penalty imposed or not more than Sh1 million.
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