Bond trader fined Sh208 million for rigging
SEE ALSO :Blue chip shares turn into penny stocks“Following the conclusion of investigations with respect to the allegation of irregular trading of Government Securities in 2016 and 2017, CMA has imposed a financial penalty of Sh208 Million being twice the amount of benefit Mr. Muhoro received from irregular trading,” CMA said. A whistleblower helped CMA unravel the scheme involving collusion between fixed income dealers at investment banks, asset management firms and brokerage firms. The market players colluded with individual bond facility holders in bank custodial accounts to trade bonds ahead of orders placed by non-suspecting investing clients. “Mr. Muhoro colluded with fixed income dealers at brokerage firms through the creation of artificial arbitrage opportunities, thereby realising a capital gain of Sh104 million by taking advantage of the price differential before the client orders were executed,” CMA said. Mr. Maena apparently supplied Muhoro with insider information on bond trades, which he used to front-run the market and make dual trades in order to benefit at the expense of other investors.