CMA to blacklist market fraudsters

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By James Anyanzwa

The Capital Markets Authority (CMA) has established a database for blacklisting and shaming fraudsters in the financial markets.

The market regulator said it was working with various stakeholders, including the Kenya Association of Stockbrokers and Investment Banks (Kasib) and the Fund Managers Association of Kenya to identify the swindlers.

Micah Cheserem the authority’s chairman, said the new measure would help weed out individuals have tarnished the image of the local capital markets.

"All fraudulent people in the industry would be identified and put in a data bank. I appeal to you that your organisations should be ready to remove those that are doing wrong," Cheserem told chief executives of market intermediaries at a workshop on corporate governance in Nairobi yesterday.

He said the authority would remain vigilant in dealing with the errant players.

"Majority of market players are honest. Why should we have a few to derail us," said Cheserem.

He said fraudulent activities are bound to scare off foreign investors from the domestic market.

Fraudulent activities

"We have a data base and we are working with various associations to get us names of those involved in fraudulent activities," said Mrs Stella Kilonzo, the authority’s chief executive.

Mr Cheserem, however, said cases of abuse of customers’ account have significantly reduced in the last 6-8 months, owing to the authority’s establishment of a fraud unit.

"The cases of new fraud have significantly dropped," he said.

Stashed between a slow economy, unethical behaviour by some market intermediaries, and a crippling global recession, the NSE was hit by a bear run, after the 2007 polls.

A large proportion of retail and institutional investors fled the market after losing funds to the collapsed brokers, and to Safaricom stock, which fell below the IPO price.

But market signals indicate that the worst may be coming to an end for the 56-year-old bourse.

In December last year, foreign investors began creeping back into the market, spurring activities and prompting certain counters particularly Safaricom shares to climb above the Sh5 offer price for the first time in several months.

Renewed Interest

Fund managers are optimistic that the renewed interest in the stockmarket by foreign portfolio investors who were previously net sellers could be sustained if the economic outlook continues to improve.

The stockmarket’s recovery this year merely hinges on the overall economic growth and it is widely anticipated that the proposed Government’s fiscal stimulus package, if implemented, could positively impact the economy and corporate earnings growth.

Improved rainfall, recovery of the global economy, and an increase in earnings, profits and dividend payouts are expected to positively affect prices of listed companies at the exchange.

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