The Capital Markets Authority has imposed a KSh2.5 million fine on Andre DeSimone, the former CEO of Kestrel Capital, and disqualified him from holding a key role in a listed company or any institution licensed by the CMA for a period of one year.
The markets’ regulator also demanded KSh4.69 million from Stock broking Agent Aly Khan, being the commission received from the illegal trade of Kenol Kobil shares. CMA has banned him from holding any key position in a listed firm or an institution licensed by the CMA for a period of three years.
The Capital Markets Authority further recouped KSh23.4 million which are the gains made by the trading accounts managed by Mr. Kunal, a stockbroking agent. Mr Kunal illegally traded 2,895,100 million shares of Kenol Kobil. Commissions paid to Kestrel Capital and AIB Capital amounting to KSh333,747 and KSh14,596 respectively were also recovered.
According to the markets’ regulator, the majority of the questionable transactions were carried out by Kestrel Capital. The stockbroking firm voluntarily surrendered KSh9.86 million to CMA being the commissions earned from transactions done by stockbroking agents Kunal Bid and Aly Khan Satchu.
In May, CMA formed an Ad Hoc Committee to hear and determine the allegations of insider trading of Kenol Kobil shares. The committee comprised of four CMA board members, and four independent members namely; retired Chief Justice Dr. Willy Mutunga, Dr. Jim McFie an accomplished academic, Patricia Kiwanuka an expert in Finance and Investments, and Anne Eriksson a former Senior Regional Partner at PWC for the Eastern African region.
After hearing the submissions of the accused persons and going through the findings of the CMA investigation, the Ad Hoc team determined that Andre DeSimone, Aly Khan Satchu, Kunal Kamlesh are guilty of insider trading.
The committee noted that Kestrel’s former CEO Andre DeSimone disclosed non-public material information on Kenol Kobil’s impending takeover to the stockbroking officers Kunal Kamlesh and Aly Khan Satchu. The two agents used the insider information to trade roughly 59 million Kenol Kobil shares a week before the takeover information was made public on 24th October 2018.
CMA’s decision to punish the three individuals is a major win in the fight against financial crimes. It is the first time market participants have been punished for insider trading since the law came into effect.