Wachira Kang'aru
1 July 2009
Nairobi — Investors who lost money after the collapse of Nyaga Stockbrokers will be compensated to maximum of Sh50,000 each latest by October 2009, the Nairobi Stock Exchange management says.
According to NSE chief executive, Peter Mwangi, this was made possible after Treasury made amendments to the Investors Compensation Fund by removing limits placed on money that can be drawn from the fund to pay investors.
Under the new rules, the regulator, Capital Markets Authority, which also runs the fund, can now draw more than Sh5 million from the Fund per collapsed brokerage firm for use as compensation.
That has made it possible for CMA to draw over Sh300 million to pay over 28,000 investors who lost money in Nyaga Stockbrokers.
About 25,000 investors will get a full refund as they were owed less than the maximum payable Sh50,000 leaving 3,000 investors not fully compensated.
"The intention is to pay them Sh50,000 but we have not ruled out looking for funds elsewhere to fully compensate them," Mr Mwangi said as he addressed journalists at a market briefing on Wednesday.
The most likely fund raising modes are tracing of stolen assets through Nyaga Stockbroker's management-- a judicial process already in process, selling the brokerage's membership at NSE as was done in Francis Thuo or getting the government to foot the bill.
Those who invested through Discount Securities will have to wait a little longer as the audit is still in progress and also hope that by the time it is completed the fund will have enough money to pay them.
The fund is said to only have slightly over Sh400 million leaving only about Sh100 million after payments to investors in Nyaga are finalised.
NSE has also announced that it will sell its shares to the public earliest by 2011 but will conclude the legal process of demutualisation-- separating ownership and trading rights-- by the end of this year.
"Over that 12 month period we will seek to ensure governance structures are enhanced," Mr Mwangi said.
For now, the Demutualisation Bill has been formulated, only awaiting Cabinet approval before it is taken to Parliament for enactment.
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