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Kenya: Over 100,000 Nyaga Clients Yet to File Claims
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Business Daily (Nairobi)
12 May 2008
Posted to the web 12 May 2008
Washington Gikunju
Over 100,000 investors who had bought shares through Nyaga Stockbrokers, which is currently under statutory management, are yet to file their claims with the statutory managers.
Joint statutory managers the Nairobi Stock Exchange (NSE) and the Capital Markets Authority (CMA) say that out of an estimated 124,851 investors who had investment accounts with Nyaga, only 32,000 have so far lodged their claims with them.
The statutory managers also say that it is still not possible to predict how long the evaluation and verification of claims from investors through a forensic audit is likely to take, sentiments that are likely to add further agony to investors who have so far had no access to their money for two months now.
Out of the 124,851 CDS accounts at Nyaga, only 69,775 had shares, while 31,008 had zero balances at the time the firm was placed under statutory management.
A further 24,068 CDS accounts had not registered any transactions since opening according to the statutory managers.
Nyaga was placed under statutory management on March 5 after the firm allegedly slipped into financial distress, and following what the regulator termed as claims by investors of unauthorized selling of their shares by the firm's management.
The statutory managers have since then managed to facilitate transfer of only 24,000 Central Depository Accounts (CDS), prompting the statutory managers to extend the period for receiving claims from May 17 to June 9.
Joint statutory manager Wyckliffe Shamiah who represents CMA says that the statutory managers divided the process into two phases, the current one being receipt of claims and the facilitation of CDS account transfers, and a second phase which will involve verification of claims received through a forensic audit.
Financial consulting firm PricewaterhouseCoopers have been appointed as the forensic auditors, with the process expected to begin mid next month.
Forensic audit is expected to present the biggest challenge, since it will involve verifying and in some cases re-constructing tens of thousands of accounts.
The NSE chief executive Chris Mwebesa had earlier said that only between 300 to 400 claims could be processed in a day, meaning that the process was likely to drag on for over one year going by Nyaga's clientele base.
The process of receiving claims has been moved from Nyaga's premises at Nation Centre to the more spacious KICC building to speed up the process.
Yesterday Mr Shamiah was non-committal on the duration the statutory management process was likely to take, saying that it is still hard to determine how fast the forensic audit will be concluded. He, however, said that transfer of the process to KICC and the recruitment of more staff to assist in receiving claims was expected to hasten the process.
The Thika branch has also been closed down after realisation that most investors still needed to travel to Nairobi to obtain their Central Depository and Settlement Corporation (CDSC) statements, meaning all Nyaga clients will now be served from KICC.
Mr Shamiah said that CMA is paying for the statutory management costs, whose structure is also provided for in the CMA Act. "We have employed close to 100 staff to assist in receiving claims and are therefore calling on all former Nyaga clients to come forward and lodge their claims," said Mr Shamiah.
There are fears that claims by Nyaga's clients could exceed Sh900 million, a figure analysts says that the CMA or the NSE cannot raise. Mr Mwebesa, however ,downplayed any such fears, stating that the stock exchange had many ways of raising money to compensate the investors.
"The stock exchange has many ways of raising money as demonstrated by last year's auction of Francis Thuo's seat," said Mr Mwebesa, without giving any further details.
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The NSE raised Sh251 million from auctioning Francis Thuo's seat last year after the firm went under with an estimated Sh180 million of investors' funds.
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