The Treasury has reintroduced regulations in Parliament that will earn whistleblowers who leak capital market fraud up to KES 5 million as the State moves to stop economic crimes.
The Capital Markets (Whistleblower) Regulations 2022, which outline how the rewards will be implemented, is now before the Committee on Delegated Legislation for consideration.
The rules seek to enforce provisions of the Capital Markets Act, which provide that the CMA may reward any person who provides new and timely information leading to the recovery of sums of money that are paid into an Investor Compensation Fund.
‘The Capital Markets (Whistleblower) Regulations, 2022, seek to promote investor protection and confidence in the capital markets by encouraging CMA licensees and listed companies to comply with the Capital Markets Act and Regulations. It also promotes market integrity and accountability in the conduct of business by all market players, CMA Chief Executive Officer Wyckliffe Shamiah noted.
Under the new regulations, reportable misconduct includes: -capital markets fraud, failure to comply with legal and regulatory obligations and other offences prescribed in the Capital Markets Act and Regulations.
“where CMA successfully recovers penalties and illicit gains in the capital markets, whistleblowers shall be eligible to a reward of 3 percent of the amount recovered subject to a maximum reward of Kshs5 million in line with Section 18 (2A) (b) of the Capital Markets Act and the Whistleblower Regulations. The balance of recovered funds will be transferred and held in the Investor Compensation Fund.” CMA in the whistleblower regulations.
The Statutory Instruments Act 2013 requires all regulatory-making organs to table in the House within seven days of publication of legal notices or regulations having the force of law for approval.
However, the authority said it will implement reasonable measures to protect the identity and all information pertaining to whistleblowers in line with the Witness Protection Act.
“The Act empowers the authority to reward whistleblowers and requires the Cabinet Secretary to develop regulations on the implementation of Whistleblower rewards,” Outgoing Treasury CS Ukur Yatani in a memorandum accompanying the regulations.
Treasury CS Ukur further stated that the rules seek to enhance investor protection and integrity in the conduct of the business of companies and market intermediaries in order to enhance the stability of the capital markets.
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