CMA must act swiftly to tame market breaches


Capital Markets Authority (CMA) CEO Wyckliffe Shamiah on April 29, 2021. PHOTO | LUCY WANJIRU | NMG

The increased surveillance of listed firms by the Capital Markets Authority (CMA) is good for investor confidence in the Nairobi Securities Exchange. Among the counters that have come under the regulator's scrutiny recently are Kakuzi and Limuru Tea.

The two firms have been probed for irregular practices that have hurt small shareholders and farmers while benefiting majority owners.

The CMA has also recently penalised firms and directors found to have breached corporate governance standards and boardroom rules.

A case in point is the Sh5 million penalties meted out to three former Chase Bank executives, including being barred from participating in the capital markets. Five board members of the collapsed bank were also fined as were the auditors Deloitte.

A CMA probe revealed that Deloitte failed to inspect Chase Bank’s IT system in annual audits, creating a loophole used by the management in 2015 to hide details of billions of shillings siphoned from the bank.

Be that as it may, we wonder why it takes the markets regulator so long to rein in errant firms. It is enough for an entity to derail and cause harm not just to itself but also to the regulator and the economy.

While litigation can delay investigations and conclusion of cases, the CMA must anticipate the harm and nip it in the bud. It should also push for tougher measures through legislation to protect the market.

It could, for instance, pursue a strong enforcement mechanism that allows investors to sue firms that scam them. That’s the least the shareholders deserve.