The High Court in Nairobi has barred the Capital Markets Authority (CMA) from probing or suing Cytonn Investments over the high yield solutions scandal after the company obtained a temporary injunction.
This comes on the back of complaints by at least 4,000 investors who enrolled in the scheme, which has now backfired.
As of June 2021, the investors had collectively put in Sh14 billion in the Cytonn High Yield Solutions investment scheme.
The company’s CEO, Edwin Dande, in an interview with KTN News last week, said the Covid-19 pandemic affected Cytonn’s investments, particularly the real estate projects.
The company, Dande said, was projecting to complete the projects on time, sell them at a profit and share the proceeds with its investors.
Carole Mbugua, one of the investors, told KTN News that she is yet to re-access her Sh2.9 million investment with Cytonn, which she deposited in November 2018. She was promised a monthly interest of 18 per cent.
Mbugua is among the 4,000 investors seeking answers after their investments were frozen by the company in unclear circumstances.
The CMA said in a recent interview that the Cytonn product – High Yield Solutions – was not regulated by the agency, hence its hands were tied in taking action against the company.
Cytonn moved to court to block planned investigations against the company and its administrators in the wake of increased scrutiny.
On Tuesday, June 29, High Court Judge, Wilfrida Okwany, granted Cytonn its wish against the CMA and the DCI.
“A conservatory order is issued prohibiting the respondents in this application (CMA and DCI) from summoning, investigating, questioning, intimidating, harassing or contacting the applicants (Cytonn) in relation to the activities of the two products (High Yield Solutions and Cytonn Project Notes) pending the hearing and determination of this application,” directed Justice Okwany.
The judge further directed that the matter be heard in private, citing a need to “to protect the integrity of interested parties from public spite and ridicule”.
Cytonn had moved to court through its top directors, Edwin Dande (CEO), Patricia Wanjama (Chief Administrative Officer) and Elizabeth Nkukuu (Chief Investment Officer).
The CMA had, in September 2020, raised the alarm over Cytonn’s alleged refusal to pay its investors interests amounting to at least Sh122.8 million.
Investment experts said Cytonn punched above its weight and overestimated the profits it would make from the long-term projects, hence the financial bottlenecks it’s finding itself in currently.