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Kenya: CMA Hauls Off Nyaga Boss to High Court On Fraud Charge
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The Nation (Nairobi)
14 May 2008
Posted to the web 14 May 2008
Sam Kiplagat
Nairobi
A case in which the managing director of troubled Nyaga Stockbrokers, Mr Patrick Ndwiga Gakiavih, has been cited for fraud will be mentioned on Thursday.
The reclusive owner of the troubled stockbroker is accused by the Capital Markets Authority of withdrawing Sh523 million from the broker's account, some of which was not traced after an audit.
The landmark case was brought before Mr Justice Paul Kihara on Monday. This was after the CMA told the Judge that Mr Gakiavih had been served with the suit papers.
The Court had on April 29 issued an order to freeze Mr Gakiavih's bank accounts following a successful application by the market regulator.
Attached assets
Other than Mr Gakiavih's accounts, the court also attached some of his assets including land. Most of the parcels of land are located in Embu District and are suspected to have been bought using monies withdrawn from the Nyaga Stockbrokers account.
In the application, the CMA accuses Mr Gakiavih who owned 99 per cent of shares at the troubled brokerage firm which has been place under statutory management by the CMA and the Nairobi Stock Exchange, and his wife Elizabeth the remaining portion, of committing various offences against the Capital Markets Licencing Requirements of 2002.
CMA has among other issues, accused Mr Gakiavih of over-drafting his clients account, failing to remit transaction fees to the regulator and the Investor Protection Fund from December 17,2007 to January 18, 2008 amounting to Sh1.29 million.
He is also accused of executing unauthorised transactions in the securities of his clients thereby engaging in an act of fraud. He has also been accused of failing to secure or maintain records of written client orders for transactions and operating on a negative capital. CMA also accuses Mr Gakiavih of failing to avail inspection books and records when he was asked to do so.
While citing him for fraud, the CMA says Mr Gakiavih allegedly fraudulently transferred colossal amounts of money from Nyaga Stock Brokers to his personal accounts.
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He is also accused of effecting transactions in an attempt to induce the purchase and sale of listed securities and dealing with clients' shares without their authority. The CMA will also be seeking court's permission to inspect Mr Gakiavih's accounts.
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