The Capital Markets Authority (CMA) is investigating a trader suspected of using insider information to make Sh23 million in less than a week from the sale of KenolKobil shares.
Kunal Bid, Managing Director of Bid Securities, is accused of using classified information relating to the impending sale of KenolKobil to book huge profits for his family members.
Accounts belonging to Bid’s mother Chandrika Kamlesh and his spouse Shah Ektah are among the four where shares worth Sh43 million were bought, to be sold soon after for Sh67 million.
A leaked version of CMA’s detailed probe gives the blow-by-blow account of what the CMA intends to use as proof in prosecuting the trader besides a list of other suspects who collectively nearly made a billion from a single deal.
It all started on the Monday afternoon of October 15 last year, when, according to the investigation report, Kunal phoned Andre DeSimone while in the company of another suspect Aly Khan Satchu, both being agents of an investment bank cum stock brokerage firm, Kestrel Capital.
DeSimone was the chief executive of Kestrel Capital, which was handling the acquisition of KenolKobil by French firm, Rubis Energy, and hence had access to privileged information about the acquisition that was not available to other traders and investors at the stock exchange.
According to the CMA, beyond being business associates, Kunal and DeSimone’s children attend the same school.
On Wednesday October 17 Kunal purchased 250,000 shares of the petroleum company worth Sh3.4 million.
The following day, he is reported to have bought Sh280,000 worth of shares for his wife and Sh1.1 billion for his mother.
Besides the two purchases, Kunal also purchased shares worth Sh7.35 million for Bid Plantations limited where he is a part-owner.
Then the massive buyout of Wells Petroleum’s stake by Rubis Energy came mid-morning on October 23, a fact that CMA indicates would have a significant impact on the share price of KenolKobil.
As the transaction was underway, Kunal bought another block of shares for Bid Plantations worth Sh15.3 million, for his mother worth Sh3 million and another Sh1.5 million through his wife’s account.
“In the morning of October 24, the potential takeover of KenolKobil was announced and the announcement was released by Nairobi Securities Exchange at 8.58am to the public via email,” CMA noted.
Some 25 minutes later, Kunal sent a congratulatory message to Mr (Andre) DeSimone that stated “Nice deal on Kenol” whose response was “Asante sana (Thank you very much). Offers at 20. Consider selling.”
“Kunal replied to the text by stating that he would consider selling at Sh21.50 or Sh22,” the investigators found.
Before the information of the buyout leaked, the shares of KenolKobil were selling at around Sh15.50. By the time CMA smoked out Kunal’s share transactions and froze them, they had gained by Sh23 million.
Reached for comment, Kunal denied any wrong doing.
Register to advertise your products & services on our classifieds website Digger.co.ke and enjoy one month subscription free of charge and 3 free ads on the Standard newspaper.