×
× Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Ureport Fact Check The Standard Insider Kenya @ 50 Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

We don’t regulate Cytonn big profit fund, CMA tells court

By Julius Chepkwony | October 9th 2020 at 00:00:00 GMT +0300

CMA acting CEO Wyckliffe Shamiah. [File, Standard]

The Capital Markets Authority (CMA) has asked to be dropped as one of the defendants in a suit filed against investment firm Cytonn.

The application by CMA is in reference to a case filed by an investor for allegedly being misled into buying one of Cytonn’s financial products in which he invested Sh3 million.

But in its petition, CMA maintained that it does not regulate the Cytonn High Yield Solutions (CHYS) that Kenneth Kasinga invested in. It said it only regulates the Cytonn High Yield Fund.

The regulator and the investment firm are locked in a legal battle as some investors claim they have not been paid their investments or the return upon maturity in other Cytonn funds, such as the CHYS.

Read More

Kasinga, through lawyer Wilfred Konosi, had named Cytonn and CMA as defendants in the suit pending before the court.

However, CMA said the CHYS does not fall under its regulatory scope to warrant an audit of the firm’s activities as the investor had requested.

“The plaint does not disclose a reasonable cause of action against the second defendant (CMA) because the first defendant (Cytonn) is neither a licensee nor a product that is approved, authorised or regulated ... with the Capital Markets Act,” said the regulator in its Notice of Motion.

Kasinga entered into an investment agreement with Cytonn on October 3, 2019 in which he invested Sh3 million in the CHYS, which was offering a return of 19 per cent for 12 months.

He claims that on March 25, 2020, after seeing a spike in clients’ withdrawals due to Covid-19 and after numerous consultations with the board of investors at Cytonn, the investment firm extended all CHYS clients' outstanding accounts on maturities for three months from the effective date of their respective maturities without consultation.

On June 22, 2020, Kasinga said, Cytonn unilaterally gave him the option of either extending his investment by 12 months after the date of maturity, or entering a ‘standstill agreement’ where his funds would be extended for an additional two years after the date of maturity.

Kasinga was to choose between the two options within 30 days.

However, on June 30, 2020, before the expiry of the 30 days, Cytonn allegedly extended his investment for 12 months and rescheduled the periodic interest payable by half to be paid within five to 15 working days.

The other half would be capitalised into the principal amount he had invested.

Kasinga claims he stands to suffer irreparable loss if Cytonn is allowed to unilaterally vary the terms of the contract.

“It is fair, just and equitable that Cytonn be restrained from continuing with the implementation of its unilateral decision,” reads the suit.

The plaintiff further claims that Cytonn is operating unlawfully without the approval of CMA.

Cytonn in August sought orders by the court to stop further proceedings in the case. Documents filed in court showed that they want the matter referred to arbitration.

The investment firm says the proceedings against them were filed in defiance of the agreed dispute resolution mechanisms.


Capital Markets Authority CMA Cytonn Cytonn Investments
Share this story

More stories


Feedback