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Capital Markets

Kestrel Capital CEO quits in insider trading fallout

Kestrel Capital executive director Andre DeSimone
Kestrel Capital executive director Andre DeSimone. FILE PHOTO | NMG 

The long-serving chief executive of stockbrokerage firm Kestrel Capital East Africa, Andre DeSimone, has resigned.

Mr DeSimone exits under a cloud of ongoing investigations into suspected insider trading of KenolKobil’s shares ahead of the oil firm’s buyout by French conglomerate Rubis Énergie.

The board of the investment bank Tuesday said Mr DeSimone resigned from his roles as CEO and director at a Friday board meeting.

His exit appears to be a fallout over insider trading investigations by the regulator, which have blighted the firm’s image in recent months.

24-year reign

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His exit, which was immediate, brings to a close his 24-year reign at the helm of one of Kenya’s leading investment banks. He started his career at Kestrel in January 1995.

“The board accepted the resignation and has instructed the company to inform all appropriate authorities, including the Capital Markets Authority (CMA), of Mr DeSimone’s resignation,” said a brief statement issued by Kestrel’s board chaired by the firm’s founder, Charles Field-Marsham.

“The company has initiated a process to replace the CEO and will announce his successor at the appropriate time.”

Mr Field-Marsham is himself, together with Kestrel’s stockbroking agent Aly-Khan Satchu, also facing enforcement proceedings for their role in the suspected insider trading in the days leading up to the October 24th announcement of Rubis’ buyout offer for a premium.

Suspicious dealings

The CMA, the regulator, had in October flagged as suspicious dealings in KenolKobil shares through 14 accounts.

Charges against KenolKobil chief executive David Ohana, who was initially being investigated for his role in the suspected insider trade dealings, were dropped after investigation findings failed to “establish evidence of potential misconduct” on his part.

A party is guilty of insider trading if it leaks material, price-sensitive and non-public information or uses the same to buy or sell securities for personal gain.

The insider trading is believed to have positioned five investors – Abdul Sheikh, Farzeen Jamal, Nureen Moledina, Anand Radia and Adrian Tiwari— to book a 53.6 percent gain amounting to Sh455.9 million, based on the KenolKobil buyout price of Sh23 per share.

The CMA said on March 12 said it had seized Sh458 million gains that the insider trading suspects stood to earn from the KenolKobil takeover as shareholders of the oil marketing firm started receiving Sh26.35 billion buyout cash.

“The funds surrendered to date (March 12) relate to 90 percent of the quantum of suspicious trades identified through a total of 14 accounts that were frozen in October 2018 to facilitate investigations,” the CMA said.

Compensation fund

The recovered funds will be transferred to the Investor Compensation Fund — a kitty that the regulator uses to partially refund investors in the event of losing cash through collapse of a stockbroker or an investment banker.

Rubis, which initially bought 367.7 million shares or a 23.72 percent stake in the oil marketer, said on March 8 it had received sell commitments from shareholders holding 96.85 percent of the remaining 1.183 billion shares it did not already own, making the offer a success.

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