Raj Premchand Shah claims that in November 2013, Afrika Investment Bank sold his Real Vipingo shares without his written consent or that of his appointed representative Ronak Shah.
The investment bank, however, holds that Ronak had on behalf of Mr Shah authorised the sale through a phone call.
The CMA says the petitioner’s claim for compensation is an afterthought, after he realised he would have benefited more had he retained the shares until the buyout of Rea Vipingo REA trading company in March 2015.
A former shareholder of agricultural firm Real Vipingo has sued the capital markets regulator for alleged irregular share sale by a stockbroker.
Raj Premchand Shah claims that in November 2013, Afrika Investment Bank sold his Real Vipingo shares without his written consent or that of his appointed representative Ronak Shah.
The investment bank, however, holds that Ronak had on behalf of Mr Shah authorised the sale through a phone call.
Mr Shah first filed a complaint on the matter with the Capital Markets Authority (CMA) in July 2015.
CMA in May 2016 ruled that the stockbroker had violated provisions of the CMA Act but declined to order compensation for Mr Shah on the grounds that he had already utilised proceeds of the sale of the shares, which implied that he had accepted the sale.
“The Authority erred in law and fact by failing to hold that the appellant had been occasioned a loss of Sh6,229,200 by the second respondent (Afrika Investment Bank’s) professional negligence and breach of statutory duty in handling the appellant’s portfolio,” said the petitioner in court documents.
The firm claims that its 107,400 Real Vipingo shares that were disposed of at Sh27 each would have fetched it Sh85 at the time the formerly NSE-listed company was delisted from the bourse. It is this difference that it sought the broker to be compelled to compensate.
But CMA in its response accuses the petitioner of trying to unjustly benefit from the compensation, noting that an authorised representative issued instructions to sell the shares. CMA says the authorised representative was also son to the petitioner.
The CMA says the petitioner’s claim for compensation is an afterthought, after he realised he would have benefited more had he retained the shares until the buyout of Rea Vipingo REA trading company in March 2015.
Further the regulator denies claims by Mr Shah that it was not accorded opportunity to be heard before the decision was made.
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