Discount Securities investors get 3 months to lodge claims

About 10,000 investors who lost their money when Discount Securities shut down more than six years ago have three months to lodge their claims for compensation.

The Capital Markets Authority (CMA) has set the period of between April and end of June, this year to settle the remaining claims. "After this period lapses, all those investors who have not made their claims will forfeit them after which the shares will be transferred to the Unclaimed Financial Assets Authority (UFAA), said CMA Acting Chief Executive Paul Muthaura.

The Authority has already begun clearing the final payments to investors who lost money when Discount Securities was placed under statutory management.

"We procured the services of Co-operative Bank of Kenya in February 2012 to process and disburse funds to investors," said Muthaura. "We also transferred all details of share accounts to them to enable investors initiate the transfer process at any bank branch nearest to them."

Statutory management

Considered a notable stockbroker at the Nairobi Securities Exchange with a huge network of offices throughout the country, Discount Securities Ltd was placed under statutory management back in 2009.

It was subsequently locked out of the market. This also locking out investors as they could not transact their shares. Subsequently, the CMA authorised Co-operative Bank to transfer investor accounts from the firm to its Central Depository System.

All Discount Securities' assets were seized after it was placed under statutory management. CMA says the final phase of the compensation process will last three months.

The exercise will also address the transfer of shares to other Central Depository Agents (CDAs) for those investors still holding shares under the custody of the collapsed Discount Securities.

The authority has warned that investors who will not have submitted claims by June 30th, 2015 will forfeit their claims.

Those who would not have transferred their shares by June 30th this year will have their securities deemed as unclaimed and may be transferred to UFAA.

Number of creditors

Muthaura said there are over 10,000 investors who are yet to lodge claims for compensation. "We launched the first phase of compensation to investors in February 2012 and since then, 4,324 investors have been compensated. We have paid out a total of Sh84 million, which translates to 26 per cent of the total creditors of Discount Securities Ltd."

He said the compensation of investors is being done through the Investor Compensation Fund, established for paying off investors who suffer pecuniary loss resulting from the failure of a licensed stockbroker or dealer to meet their contractual obligations.

An investor can receive up to a maximum compensation amount of Sh50, 000 as provided for under the law. To receive compensation, genuine claimants are expected to visit Co-operative Bank with identification documents, Central Depository Account Statements, and evidence of claims against Discount Securities Ltd in order to lodge a complete claim.