Kenya: Top Stock Exchange Trader Satchu Linked to Sh500 Million Insider Trading

12 February 2019

The Capital Markets Authority (CMA) has revealed a WhatsApp message from stock market trader Aly-Khan Satchu linking him to insider trading of KenolKobil shares ahead of the oil marketer's takeover announcement.

CMA Monday told a court that Mr Satchu tipped off investors to buy huge amounts of KenolKobil shares based on the takeover information that was not in the public domain.

Mr Satchu demanded they split the profit gains -- estimated at Sh500 million -- into half once they sell the acquired shares to French firm Rubis Energy, which announced on October 23 that it was taking over KenolKobil.

CONFISCATED PHONE

CMA told the court it learnt of the communication from Mr Satchu after it confiscated his phone on January 16, following the insider trading investigation.

"Some of the text messages recovered indicate that Mr Satchu notified a third party a clear week before takeover announcement," the CMA said in court papers.

"He had actionable intelligence on a share buyout at a premium at the Nairobi Securities Exchange and providing highly specific details on the calculation of the said premium, and recommended to the traders to get in and out for a 50-50 split of profits."

CMA hired East African Data Handlers, a computer forensic firm, for the KenolKobil assignment, which retrieved information from emails, computer hard drives and messaging systems such as WhatsApp.

The forensic firm can recover altered or deleted e-data, which is helping CMA to build the case.

It revealed Satchu's WhatsApp messages with traders talking of KenolKobil buyout, promising a 50 percent gain and asking the traders to remain discreet ahead of the takeover announcement.

'ACTIONABLE INTELLIGENCE'

"I have actionable intelligence on a share at NSE. Please advise if this is something you want to look at. It's a buyout," Mr Satchu's WhatsApp message of October 13 says, yet the deal was made public on October 23.

"I can open an account for you at Kestrel. In and out for 50:50 split of profits. Quick in early next week and out on announcement."

The client responded: "What ticket and what sort of pop do you expect?"

The CMA also seized the phones and laptops of KenolKobil CEO David Ohana and Mr Andre De Simone, the head of stock brokerage firm Kestrel Capital. It suspects the 66.8 million suspect shares worth Sh948.5 million traded between October 15 and October 23, last year were based on non-public information on the takeover.

Mr Satchu allegedly had prior knowledge before recommending five traders to Kestrel to buy KenolKobil shares. The case will be heard on February 21.

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