The Capital Markets Authority (CMA) has recovered KSh 1 billion over the past three years, ill-gotten cash and fines paid by market players who have been found with cases of misconduct.
“We have also disqualified over 20 directors of listed entities who have been found to have committed various offences within the capital markets,” said Abubakar Hassan, Director of Market Oversight at the Capital Markets Authority.
He also disclosed that while bondholders of collapsed Imperial Bank have yet to be compensated, cash that was raised during the bond offer is still safe in an account of CBK.
CMA does not take responsibility for misleading prospectus
“The fraud in Imperial Bank was discovered after the lender’s then Managing Director passed on. CMA wrote to directors of Imperial Bank to show cause why action should not be taken against them for misleading investors while issuing its prospectus. This matter is still pending before the tribunal,” said Hassan in a recent interview with Rina Hicks of MoneyWise.
He said that CMA does not take responsibility for the correctness of information in a prospectus during a public offer.
“CMA looks at the prospectus and other disclosure requirements such as who owns the firms, what they plan to do with the cash and future prospects of the business. If the information in the offer documents if false, directors of the firm will be held criminally responsible and liable to 7 years in jail of KSh 10 Million,” said Hassan.
The other option CMA has if there is a problem is a civil remedy- compensation to the investor who has lost cash. Enforcement of these remedies has to pass through the courts.
Most investors do not care to read the prospectus of any offer and instead concentrate on high returns. CMA does not take responsibility for the correctness of the prospectus.
” We encourage investors not to focus on the yields of the investment but also its viability.One must make use of investment advisers before going into any investment,” said Hassan.
ALSO READ: CMA Stops Cytonn Asset Managers Limited From Recruiting New Clients
