The CMA is currently investigating the country’s first major case of insider trading. The case involves a stock broking firm, an agent and the executive of a listed company.
Aly Khan Satchu, a financial markets expert is accused of using non-public material information to trade shares of Kenol Kobil in October 2018. The trades were carried out by Nairobi based stock brokerage Kestrel Capital.
According to the trading records unearthed by the investigation, more than 430 million Kenol Kobil shares were traded in the week preceding the announcement of Kenol Kobil’s acquisition plans by French company- Rubis Energie. It was a sharp rise in trades compared to 475,500 shares of the energy firm transacted in the week before.
The law that governs the Capital Markets in Kenya outlines insider trading as a crime punishable by a fine of not more than Ksh2.5 million or imprisonment for a two-year term and payment of the gain made or loss averted from the illegal trade.
In most insider dealings, it is often difficult to obtain sufficient evidence to prosecute suspects of such dealings. If CMA wins the case against the accused, it will be a major milestone for the financial markets regulator.
In advanced Capital Markets such as the US and UK, cases of insider trading often carry heavy penalties.
The UK law provides for a maximum jail term of seven years while the US carries a maximum jail term of 20 years.