Stock market agent Aly-Khan Satchu proposed to split in half profits generated from an insider trading deal that is now the subject of an investigation by the capital markets regulator.
Private WhatsApp message conversations retrieved by the Capital Markets Authority (CMA) in the ongoing investigation capture Mr Satchu promising to share on a 50/50 basis profits generated from the purchase and quick disposal of KenolKobil shares ahead of the November 24, 2018 announcement that it would be bought out by French multinational Rubis Energie.
The CMA has disclosed to court Mr Satchu’s communications with his clients in response to a case filed by the trader challenging the market regulator’s ongoing investigations.
Besides Mr Satchu, CEOs of KenolKobil (David Ohana) and Kestrel Capital (Andre DeSimone) are also being investigated by the regulator.
CMA has only disclosed evidence implicating Mr Satchu since he is the one who has gone to court to challenge the investigations.
The three face possible sanctions from the regulator should they be found guilty of having engaged in insider trading.
“I have actionable intelligence on a share at the Nairobi Securities Exchange please advise if this is something you want to look at it’s a buyout.
"I can open an account for you at Kestrel in out for a 50/50 split of profits –quick in early exit next week and out on announcement,” Mr Satchu told one of his clients in a WhatsApp chat.
The co-conspirator’s name is not disclosed in the extract report filed in court.
The regulator, however, identified individuals who placed the suspicious buy transactions through Mr Khan as Abdul Sheikh, Farzeen Jamal, Nureen Moledina, Anand Radia and Adrian Tiwari.
The five bought a total of 56.8 million KenolKobil shares at a cost of Sh850.5 million or an average of Sh14.9 per share in the week preceding the disclosure of the Rubis offer.
This positioned them to book a 53.6 percent gain amounting to Sh455.9 million, based on the buyout price of Sh23 per share.
Mr Satchu’s share of the proceeds would have been Sh227.9 million, assuming the stocks were not frozen by CMA and the partners agreed to the trader’s proposal to take half of the profits.
The WhatsApp chats retrieved from the trader’s iPhone by East African Data Handlers, which was hired by CMA, show Mr Satchu running afoul of Kenya’s insider trading laws.
A party is guilty of insider trading if he leaks material, non-public information or uses the same to buy or sell securities.
Mr Khan urged the unnamed counterparty to make haste in buying KenolKobil’s shares, saying they will make a quick profit by selling the stock in the market once the Rubis’ offer was announced.