Centum fined for violating CMA rules

By MORRIS ARON

The share price of investment firm, Centum, continued to dip, dropping by as high as 4.5 per cent before settling on an average of 2.5 per cent. The fall came a day after the Capital Markets Authority slapped a fine on the firm for not issuing a profit warning.

Thursday’s drop confirmed a trend that has been evident since the firm posted a 40 per cent profit dip to Sh1.37 billion for the financial year ended March, a week ago.

Under the CMA regulations, a firm whose profits drop by more than 25 per cent is required to issue a profit warning through the mass media.

The alert should be sent to the NSE, CMA, and the public at least 24 hours before announcement of the results. “An issuer who fails to comply with any continuing obligation within the prescribed time shall be liable to pay a penalty at the rate prescribed by the authority,” says the CMA public disclosure requirement.

Centum did not issue a profit warning leading to share prices falling by close to 20 per cent in single day trading after the announcement of the profit dip, which is a contravention of the capital markets regulations. Following the development, CMA gave the firm two days to explain why it had not issued a profit warning. On Tuesday, outgoing CMA chief executive Stella Kilonzo said the regulator was not convinced by Centum’s explanation and that it was difficult for it to issue the profit alert because its property valuations came through after the financial year and slapped a fine on the firm, but no details of the fine amount was disclosed by the CMA.

However, sources who spoke to The Standard said the fine amount charged on Centum stood at Sh1 million