Kenya’s Capital Markets Authority (CMA), has published a digest of legal cases that Authority has been involved in, and some of which were later appealed.
The 27 cases cover ten years, and most the largest share involve dealings at Uchumi and others revolve around executives and directors of CMC, commercial banks, and a handful on rogue stockbrokers who preyed on retail investors during the heyday of the Nairobi Stock Exchange during the IPO listings of Kengen and Safaricom.
Some notable cases include, Solomon Alubala who was fined Ksh 104.8 million and barred from holding a position at a listed firm for ten years, Bernard Mwangi who attended Uchumi board meetings and sold shares while the company was performing poorly, CMA cases versus Jeremiah Kiereini and Martin Foster, Chairman and CEO of CMC Motors, the CMA versus the Institute of Certified Public Accountants of Kenya (ICPAK) over audits done by its members at CMC, cases involving Chadwick Okumu, CFO of Uchumi, and CMA versus Jonathan Ciano, a CEO who was for a time celebrated for turning round the Uchumi. They also have a case of Alnashir Popat and Imperial Bank directors, and Munir Ahmed MD of National Bank who the CMA fined Kshs 5 million and barred from holding a position at a listed company for three years.
The cases are published in partnership with the National Council for Law Reporting who have an online database of over 124,000 court cases.
Last week saw the release of financial results of SBG Securities (formerly CFC Stanbic Financial Services/CSFS). They are the first stockbroker (they are actually licensed as an Investment Bank) to release their 2016 results and this was done along with the release of the results of Stanbic Bank and their common parent – Stanbic Holdings.
At SBG Securities, revenue dropped from Kshs 599 to Kshs 294 million. This was mainly due to stockbrokerage commissions which reduced from Kshs 399 to Kshs 223 million. Expenses were largely unchanged except for salaries that went down from Kshs 183 to 142 million.
SBG’s pre-tax profit for the year was Kshs 3 million, which was substantially down from Kshs 277 million in 2015. Their balance sheet also reduced down from Kshs 1 billion to 648 million. SBG is the number 3 stockbroker in Kenya with 13.8% share, and in
2015, SBG was second in brokerage commission behind Kestrel Capital.
In a notice sent to clients, they reported that turnover at the Nairobi Securities Exchange for the year was Kshs 294 billion compared to Kshs 419 billion in 2015. Also, that market weakness is expected to continue in 2017. But they added:
A new year always starts on a high with each of us drafting our investment/ financial resolutions. As the year progresses, so do our plans and at times they don’t necessarily materialize. 2017 can be the year that you fulfill your investment resolutions by investing in shares listed on the Nairobi Securities Exchange. Whilst the market has hit an 8-year low, we believe this is the time to invest.
We all hope the days of collapsing stockbrokers at the Nairobi Stock Exchange (NSE) are now a thing at the past. However new share offering such as Britak, Family Bank and Bank of Kigali, and other personal finance initiatives such as the I’m a Cooperator movement are likely to convert some people into first time share buyers. So how does one ensure that their funds are not misused by an errant stockbroker or their employees? Read on
A guest post by Shiroh
While it takes a lot of sweat to save for investments, many investors have found themselves in a tricky situation when unscrupulous dealers engage in irregular sale of their shares. While this practice cannot be tolerated for all involved, it is important that one takes proactive steps to avoid losing your investments. These can include;
1. Subscribing to the Central Depository System Alert Service: The mobile phone has truly revolutionized many industries in Kenya. For a nominal amount of Kshs. 10, one can receive alerts to their mobile phone anytime a transaction is made from their CDSC account. For more details, check the CDSC Kenya website.
2. Freezing activity on CDS Account: Since getting mobile phone may not be possible for people residing abroad, freezing any activity on a CDSC account can be done. These instructions are communicated to the CDSC and activity can only resume at the request of the account holder.
3. Constantly monitoring your activity of your account at your preferred Stockbroker. Many people don’t bother to check the activity of their accounts once they make the investments only to get a shock of their lives when they want to liquidate them. A broker is under obligation to provide investors with a statement of account through which they can monitor the movement of their investments.
4. Developing a personal relationship with a dealer or broker. While some personal relationships work to the detriment of the investor, sometimes having a specific person who can address any enquiries that you have can be a great plus.
5. Finally, you should report any fraudulent sale of shares to the Complaint Handling Unit of the NSE.
Capital Market Awards: These took place late in January 2011 and were organized by Think Business who also organize awards for the banking and insurance industry. The awards gained notoriety when they started a few years ago when the regulator capital markets authority (CMA Kenya) complained about their implied association /endorsement as a result of the name.
Some of the winners this year included;
Custodian of the year: KCB
Bond deal of the year: Housing Finance
Stockbroker of the year: Genghis Capital
Fund manager of the year: Genesis Kenya
Legal transaction advisors: Hamilton Harrison & Matthews
Unit trust: British American (which was launched 5 years ago)
Research team: Kestrel capital
Lead transaction advisor: Dyer & Blair
Investment bank of the year: Dyer & Blair
D & B director Jimnah Mbaru mentioned that they had used Hamilton Harris & Matthew in most of their deals, and had been represented in several deals including NIC (Uganda), Bralirwa (Rwanda), CRDB (Tanzania) and the largest was KPLC in Kenya which was a complex deal. He added that its not just technical know-how that wins them deals (everyone had talented transaction employees) but it’s a more about relationship management and understanding people, politics, social economic (and that many runners up had recruited staff from D&B). But he also spent 5 minutes telling what looked like it was going to be a very funny accounting or golf joke, only that it turned out to be one everyone knows as it ends with a lawyer answering ‘how much do you want 2 + 2 to add up to?’
The CMA awards were mostly deserved, but there are a few glitches that were evident:
– The organizers insisting on presenting awards (best performing NSE company won by British American Tobacco) that were not voted or verified by the auditors (who stated this before the award was given)
– Some categories listed had no entries (IPO of year, Chairman of year, PR transaction advisor), or two winners in same category (CEO of the year shared by Nasim Devji and Martin Oduor Otieno) and some prizes winners not showing up.
Other Awards up for grabs
– Poptech: Nominate a Poptech Social Innovation Fellow
– Property Awards: Organized by Property Expo Kenya, these take place on February 24 at Sarit centre and will award property developer of the year, real estate agency of the year, mortgage company of the year and real estate journalist of the year
Other Media Awards include
– Diageo Africa Business Reporting Awards
– East African media awards by East Africa Business Council
Tonight CFC Stanbic Financial Services launched online share trading which they say is the first online share trading platform in the country. The actual ceremony was conducted by Information Permanent Secretary Bitange Ndemo (a Mumias shareholder through CSFS) who noted that while Diaspora Kenyans remitted $2 billion per year, they hand no true seamless mechanism to buy shares – until now.
It’s a light-weight system accessible to CSFS customers to make trade orders – buy, sell, cancel, monitor volumes, settlements, & trade live at the Nairobi Stock Exchange in real time as well as get statements & portfolio valuations.
Disclaimer: I’ve been a long-term investor through CSFS primarily through e-mailing trades, and this has been quite satisfactory. Enabling online share trading is a service which several brokers have promoted, but delivery has been spotty. The CSFS system is available even on Smartphones,and while SMS and mobile money are not highlighted, these will be features to push for and the service is one to try out and see.