Market regulator moves to tame insider trading

By James Anyanzwa

The Capital Markets Authority (CMA) has voiced concerns over the prevalence of insider trading in the market.

The market regulator said its investigations have revealed the existence of the vice that threatens market confidence.

"We have investigated previously. We suspect there must be insider trading and CMA is going to be more vigilant," Micah Cheserem, the authority’s chairman told reporters in Nairobi on Tuesday.

Cheserem said the authority would take legal action against those implicated in such an unethical practice.

"We have not really taken people to court in a big way on insider trading, but CMA is going to be very active and vigilant to ensure insider trading does not happen," he said.

The only incident that the authorities took action involves former Kenya Commercial Bank Managing Director Terry Davidson and a manager with the Uchumi chain of supermarkets who were charged with the sale of the supermarket’s shares before its suspension from trading in 2005.

Surveillance system

Mrs Stella Kilonzo, CMA’s chief executive said the authority was in the process of procuring a surveillance system to deal with the malpractice. Kilonzo said the system would enable the authority to monitor trading on-line.

The authority, she said, would also seek legislation that would make it mandatory for company directors to disclose certain information related to share purchases. Insider trading is the practice of trading in a security (buying or selling a stock) based on information that is not available to the public.