East African Business Week (Kampala)
Cedric Lumiti
24 March 2008
Nairobi — Credibility is at stake for East Africa's most vibrant market regulator, the Kenya Capital Markets Authority (CMA).
For most of last week, dozens of investors with the now collapsed Nyagah Stock Brokers (NSB), the second stock brokerage firm to go down under in less than six months, were counting their luck for fear of losing out on the much hyped Safaricom share purchase bonanza.
The firm is now under statutory management after being accused of selling off clients' shares without their knowledge and so last week, long queues of clients waited outside its offices to know the fate of their accounts.
"I have been here since yesterday," complained Steve Kamande, one of the affected investors. "I have now secured the appointments, I will not know my account balance until 31 march when am required to come back with photocopies of my account documents. It would be very unfair if some of us lost out on the safaricom IPO," he added.
Francis Thuo and partners, another stock brokerage firm collapsed towards the end of last year. Some of the investors of the company have since been cleared with by the CMA. Crest-fallen investors, queuing at the NSB offices complained of lack of information as the rest of the country readies for the purchase of the prized Safaricom shares. Safaricom, East Africa's cash-minting telecom operator is offloading some 25% of government shares. Kenyans have been looking forward to owning a share of the company, which last year made some Ksh17 billion (over US$261 million).
It emerged last week that a simple task like obtaining statements regarding one's Certificate of Deposit (CDS) account had been warped in unnecessary bureaucracy as investors were first required to seek appointments with the statutory management before they can receive the statements. They said they were given a two month deadline to lodge their complaints on whether their CDS accounts should be transferred to other brokerage firms.
The Statutory manager of the cash strapped firm Wycliffe Shamiah said all claims on transfers of the accounts to any other Central Depository Agent (CDA) on the NSE will take place between March and May. All the branches of the collapsed firm will remain closed as investors will be forced to come to the capital in Nairobi to lodge the complaints.
"We would like to thank all the stakeholders for their cooperation in advance given the unfortunate situation and assure them that no one will lose their investments as a result of the situation," said Shamiah.
The firm was early this month put on statutory management for six months and its activities suspended from the national bourse over cases of irregularities, failure to meet its financial obligations and trading in client's shares without their consent.
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