CMA takes over another troubled stockbroker

By James Anyanzwa

The troubled Ngenye Kariuki Stockbrokers has been put under statutory management.

The order runs for six months.The broker is the latest casualty in a string of failures that have struck four brokerage firms in three years.

The Capital Markets Authority (CMA) said Ngenye Kariuki was found not to be compliant with the authority’s legal and regulatory provisions and efforts to restructure the company have not born fruit.

"In this regard, and in the exercise of its regulatory mandate, under the Capital Markets Act, mainly the protection of the interests of the investors, the CMA Board has resolved to place Ngenye Kariuki and Company Limited under statutory management," said Stella Kilonzo, the authority’s Chief Executive.

New management

Kilonzo said the authority has appointed Wycliffe Shamiah as the Statutory Manager with effect from on Friday (February 5, 2010) for a period of six months.

In a statement dispatched to newsrooms on Friday, Kilonzo said the action was undertaken to ensure an orderly approach to addressing the challenges facing the broker and to give the company a chance to revive its business.

"This will help to protect the investor interests especially in facilitating their access to trading at the Nairobi Stock Exchange," she said.

Kilonzo said taking over the brokerage firm will also provide the authority with an opportunity to trace and preserve any assets of the firm that may be applied to compensate investors with proven losses.

She said the statutory manager would assume the management, control, and conduct of the affairs and business of the company to the exclusion of its shareholders and its board of directors.

Procedures of claims

Kilonzo said the statutory manager will communicate detailed guidance to the investors, customers and creditors of the company on the procedures to be adopted for making claims in addition to the mechanisms to facilitate the transfer of Central Depository System (CDS) accounts of those investors who desire to effect trades in the near future.

She said all parties concerned are requested to give the statutory manager up to March 1, to familiarise himself with all aspects of the company before forwarding any claims or lodging any requests for transfer of CDS accounts.

The authority has been undertaking a comprehensive set of reforms to promote, regulate, and facilitate the development of orderly, fair and efficient capital markets.

A key component of these reforms is focused on measures to safeguard the integrity of the capital markets, strengthen investor confidence, and broaden investor participation in the market.