A Nairobi-based forex trader Michael Gitonga who is battling charges of defrauding clients of Ksh 215.3 million now wants the case at lower court withdrawn.
When he appeared before magistrate Benmark Ekhubi,the court was informed that Capital Markets Authority which is a complainant in this case has an investigation department and this matter will be dealt with inhouse.
Magistrate Ekhubi directed parties to file formal applications as he gives other directions.
Gitonga, who is also known as Tosh, is accused of contravening CMA regulations by directly handling client funds, an act prohibited for licensed money managers.
Court documents indicate that between April 2022 and August 2024, he allegedly diverted Ksh 212.16 million of clients’ money for personal use.
He is also accused of fraudulently obtaining an additional Ksh 3.14 million from three individuals after falsely claiming he would invest the money on their behalf.
According to Kenya’s online forex trading regulations, a money manager is only allowed to oversee a client’s portfolio in return for a fee but cannot access or withdraw client funds.
Clients are required to deposit funds into their own trading accounts, which they open through an online foreign exchange broker.
However, Gitonga allegedly flouted these rules, accessing investor funds and misusing them.
Additional details from the charge sheet show that between April 2023 and April 2024, Gitonga allegedly obtained Ksh 1.3 million from an investment company, Ingotse 95, under false pretenses.
He is also accused of fraudulently acquiring Ksh 1.54 million from Chepkembol Labbat between March and April 2024 and Ksh 300,000 from James Mwaura Mbugua between March 2022 and September 2024, all while claiming the money would be invested in forex trading.
The CMA, which suspended Trade Sense Limited’s licence for 90 days on March 3, cited governance failures, financial non-compliance, and anti-money laundering concerns as reasons for its decision.
The regulator had been engaging the firm over these breaches since 2023, indicating that Gitonga had been on its radar for some time.
Trade Sense Limited required a minimum investment of Ksh 258,380 ($2,000) for retail clients and Ksh 1.2 million ($10,000) for corporate and high-net-worth investors.
The firm also imposed a 90-day lock-in period for the principal investment and charged a three percent management fee, prorated daily.
Kenya’s forex trading market has witnessed a rise in fraudulent schemes as more investors seek to capitalise on the lucrative but high-risk sector.
CMA has only licensed non-dealing brokers, meaning they do not engage in market-making activities but only provide trading platforms and accounts.
However, some traders have found ways to bypass regulations, resulting in significant investor losses.
The forex market is one of the largest and most liquid in the world, with daily transactions exceeding $7.5 trillion.
Kenya has seen a surge in participation from tech-savvy investors but the risks associated with unregulated forex trading prompted the CMA to introduce the Online Foreign Exchange Trading Regulations in 2017 to safeguard investors.
The CMA has warned against fraudulent traders who lure investors with promises of high, unrealistic returns.
Gitonga’s case now serves as a major test for enforcement in the sector, with regulators keen to clamp down on violators.
CMA will use the 90-day suspension period to review whether to lift or extend Trade Sense Limited’s suspension or to take further regulatory action.
The Capital Markets Authority (CMA) has moved to quell investor panic after rumors swirled that Genghis Capital Limited, one of Kenya’s prominent fund managers, had been placed under statutory management.
In a March 11, 2025, statement, the CMA clarified that no such action had been taken but revealed that the firm faces urgent operational challenges, including unmet contractual obligations to a third party.
This development comes amid a cascade of crises for Genghis: a bitter rift with Safaricom over the Mali Money Market Fund (MMF), a Sh355 million debt default triggering asset seizures, and a troubled historical legacy tied to the collapsed Chase Bank and political intrigue.
Recent Troubles
Genghis Capital’s woes escalated in January 2025 when South African businessman Auswell Mashaba instructed auctioneers to seize its office assets—including furniture, laptops, and printers—over a $2.74 million (Sh354.55 million) debt.
Court documents reveal the debt originated from a 2017 loan of Sh293 million, which ballooned to Sh401.1 million with interest.
Despite a 2021 consent agreement to repay in installments, Genghis breached terms, prompting Mashaba’s recovery bid.
While CEO Edward Wachira assured investors that client funds in Genghis-managed portfolios (including the Mali and Hela Imara funds) remain safeguarded by independent trustees and custodians, the auction has stoked fears of broader instability.
The CMA has since demanded a repayment plan from Genghis.
The Mali MMF Saga
The firm’s troubles intensified in 2024 amid a public fallout with Safaricom over the Mali MMF, a mobile-based investment product launched in 2019 to tap M-PESA’s 66 million users.
The partnership soured after a July 2024 data breach exposed Mali users’ balances, prompting onboarding suspensions and technical overhauls.
By December 2024, Safaricom unveiled Ziidi, a rival fund managed by Standard Investment Bank, ALA Capital, and Sanlam, sparking accusations of betrayal from Genghis.
In a protest letter, Genghis accused Safaricom of breaching their 2020 agreement by refusing to launch Mali, migrating users to Ziidi without consent, and denying the partnership’s existence.
Safaricom countered that Mali’s “rickety” platform necessitated delays and emphasized Ziidi as a separate product.
The telco’s insistence on multiple fund managers for “risk diversification” hinted at deeper tensions, including alleged discomfort with Genghis’ political links to former President Moi’s family.
Investor Panic
By January 2025, Mali investors faced withdrawal delays amid Genghis’ debt crisis, triggering panic. Safaricom blamed “technical issues,” but users, fearing asset losses, flooded social media with complaints.
Despite Genghis’ reassurances—noting Mali’s Sh3.1 billion assets are held by KCB Bank (trustee), SBM Bank (custodian), and audited by RSM Eastern Africa—trust eroded. Mali’s has 700,000+ investors.
Chase Bank’s Shadow
Genghis’ current woes echoes past crises. In 2016, Chase Bank’s collapse left Genghis—then a subsidiary—stranded with 80% of its deposits frozen.
Directors, including former Chase executives, sold shares to new owners in a liquidity scramble.
This ownership shift, however, drew scrutiny from the Kenya Deposit Insurance Corporation (KDIC), which in 2020 sued Genghis and subsidiary Boulevard Properties for allegedly aiding Chase’s looting. Genghis denied wrongdoing, citing post-2016 ownership changes.
The Moi Family Factor
Political undercurrents further complicate Genghis’ trajectory.
In 2022, Alex Chesosi, an ally of Gideon Moi (son of former President Daniel arap Moi), became Genghis chairman.
Though Chesosi resigned in 2023, sources claim top officials opposed Safaricom’s sole reliance on Genghis due to perceived Moi family ties—a friction point in President William Ruto’s administration.
Safaricom’s pivot to Ziidi, partnered with Ruto-aligned entities, highlights this tension.
Genghis, however, denies Moi ownership, attributing shares to MNW Nominees Ltd.
Investor Implications: Separated Funds vs. Reputational Risk
The CMA maintains that client funds in Mali and Hela Imara are legally segregated from Genghis’ assets, insulating them from the firm’s liabilities.
Yet, reputational damage persists. Genghis’ equity trading rank has plummeted since its NSE heyday (7th largest in 2016), and the Safaricom rift risks ceding the lucrative mobile investment market to Ziidi.
Genghis Capital stands at a crossroads.
While the CMA’s intervention offers a regulatory lifeline, the firm must navigate debt repayment, legal battles, and restored investor trust.
Nairobi – In the wake of a sticky debt burden that has hit the headlines this week, a number of nvestors in the Mali Money Market Fund (MMF), managed by Genghis Capital, have been gripped with panic and embarked on withdrawal of their funds for fear of the firm getting deeper into a legal tussle with its creditors.
Some have taken to social media to complain about being unable to make withdrawals from their accounts and it has been a trending topic on most platforms since Monday.
This panic was triggered by reports of Genghis Capital facing significant financial strain due to unpaid obligations, leading to heightened calls for intervention by the Capital Markets Authority (CMA) of Kenya.
The Mali MMF, a product aimed at democratizing investment through mobile technology in partnership with Safaricom, has been a popular choice among Kenyans looking to invest with ease through M-PESA. However, recent revelations about Genghis Capital’s financial troubles, including a substantial debt of KES 355 million, have sent shockwaves through the investment community.
Withdrawal Triggered by Debt Concerns
The day began with social media platforms buzzing with posts from concerned investors, some of whom reported difficulties in accessing their funds. The situation escalated as news spread of auctioneers being dispatched to liquidate Genghis Capital’s assets, a clear sign of the firm’s dire financial state. This led to an urgent rush by investors to withdraw their investments from the Mali MMF, fearing the potential loss of their savings.
CMA’s Swift Intervention
Recognizing the potential for a financial meltdown that could affect thousands of small investors, the CMA quickly issued a statement assuring that client assets within the Mali MMF are safe. “We are engaging with Genghis Capital to formulate a roadmap to address these outstanding debts,” stated the CMA in a press release.
CMA says the scenario underscores the financial pressures facing some investment banks in Kenya, highlighting the risks involved in high-stake financial engagements. “CMA would like to clarify that clients’ assets are held in segregated accounts separate from the funds of Genghis Capital Limited,” it stated in a press release.
Edward Wachira, CEO Ghenghis also moved to assure investors that their money is safe, “As a market intermediary and fund manager for both the Genghis Unit Trust Fund and Mali Money Market Fund, we guarantee that trustees and independent licensed custodians securely manage all client funds. There is a clear separation of assets between client and company assets, protecting your investments regardless of any internal matters that may arise.” He said in a press statement.
CMA emphasized that the funds are held in segregated accounts, protected by regulatory guidelines established in 2023, and managed by authorized custodians and trustees.
The CMA’s intervention aims to stabilize the situation, reassuring investors that their investments are secure while Genghis Capital navigates its financial challenges. This move is critical not only for Genghis Capital but also for maintaining confidence in Kenya’s burgeoning mobile investment sector.
Market Sentiment and Future Outlook
The sentiment among investors remains mixed. While the CMA’s assurances may have calmed some, the rapid withdrawal attempts highlight a broader concern about the transparency and stability of mobile-based investment funds. Financial analysts suggest that this crisis could lead to tighter regulations or a reevaluation of how such funds are managed and marketed to the public.
“Today’s events underline the need for robust investor protection mechanisms, especially in innovative financial products,” said an analyst from a local investment firm. “While the CMA’s response has been commendable, the incident serves as a wake-up call for both regulators and fund managers.”
The Debt
Genghis Capital’s assets have been put for auction over the debt owed to a South African entrepreneur, Auswell Mashaba. The investment bank was also unable to stop Moran Auctioneers from seizing its office equipment for sale to recover the debt.
The move came after High Court Judge Alnashir Alee Visram declined to certify the application of the stockbroker as urgent. The legal battle stems from a loan of US$2,265,000 (Sh293.08 million) that Mashaba issued to Genghis Capital on January 25, 2017, with an interest rate of 7.25 per cent.
After failing to repay the money, Mashaba sought a judgment for $3,100,000 (Sh401.13 million) and continued interest.
Court records reveal that former Managing Director of the stockbroker, Geoffrey Gangla admitted the default on February 18, 2020. An agreement signed later on October 18, 2021, stipulated that Genghis Capital would pay US$2,950,000 (Sh381.75 million) plus interest from October 15, 2020, with specific payment deadlines.
However, the company only managed to pay Ksh 114.35 million (US$1,115,565) leading to the current auction proceedings. The auctioneer has listed office items for sale such as furniture, electronics, and office equipment, in an attempt to satisfy the debt.
This includes 16 desktops, 13 metal cabinets, 17 wooden cabinets, a five-seater leather sofa, two television sets, a fridge, and multiple laptops, chairs, and desks.
In a desperate move to halt the auction, Genghis Capital sought legal intervention. The firm went to court to block the sale. An order from the High Court dated January 14, 2025, instructed the auctioneer to sell the attached properties after a 15-day notice period.
Moving Forward
As Genghis Capital works with the CMA to address its debt issues, the focus will be on restoring investor trust and ensuring the operational integrity of the Mali MMF. Investors are advised to monitor official communications from the CMA and Genghis Capital for updates on the fund’s status and any changes in management or partnership structures.
A growing number of Kenyans are falling victim to deceptive sales tactics employed by financial advisors and firms, it has been established.
These unscrupulous practices, often referred to as “mis-selling,” involve misleading investors into purchasing unsuitable investment products.
This often involves providing inaccurate or incomplete information, or outright deception, for example, financialadvisors recommending a high-risk investment to conservative investors without fully explaining the risks involved.
Victims of these schemes have reported significant financial losses after being lured by promises of high returns and low risk. Some clients who spoke on condition of anonymity for fear of victimisation raised concerns against asset management firms and agents, alleging that they were steered toward high-risk investments inappropriate for their financial situations.
In many cases, the investors said they were pressured into high-risk investments that did not align with their financial goals or risk tolerance.
Many investors said they were enticed by promises of guaranteed returns and were not adequately informed about the risks. Consequently, these investors faced or have already incurred substantial losses due to fluctuations in asset values and other unfavourable market conditions.
Some customers said they purchased policies believing them to be simple savings plans, only to find out later about substantial penalties for early withdrawal and exaggerated returns.
A trend we studied showed that increasingly, insurance agents are venturing into selling investment products, often without the proper qualifications.
Analysts who we interviewed warned mis-selling can have serious consequences for both the consumer and the business, as it erodes investor trust and can lead to financial loss, damage to reputation, and even legal action.
To combat this issue, regulatory authorities like the Capital Markets Authority (CMA) and the Insurance Regulatory Authority (IRA) are now stepping up efforts to protect consumers and have moved to implement stricter regulations, including mandatory certification for financialadvisors and have issued warnings against fraudulent schemes.
These authorities are now implementing stricter regulations and increasing oversight of financialinstitutions.
CMA has emphasised the importance of working with licensed entities and approved products to protect investors. The insurance sector has also been affected by mis-selling practices. Some individuals have inadvertently purchased life insurance policies believing them to be simple savings plans. While many hold the Certificate of Proficiency (COP) for insurance sales, few possess the CMA certification required for investment products.
IRA is understood to be working to address this rising menace through stricter regulations and increased consumer awareness.
The Fund Managers Association (FMA) in response to concerns about this vice has now called for heightened industry standards and investor education.
Fred Mburu, the CEO of FMA, which represents fund managers in Kenya, said in an interview: “Adherence to best practices and keeping consumers well-informed is essential for building trust and advancing Kenya’s capital markets. This is critical for our economy’s growth.”
Despite FMA members committing themselves to a code of conduct aligned with industry best practices, prioritising transparency and investor protection, Kenya’s investment landscape is currently facing challenges from the mis-selling of investment products or services. Like in many other markets, mis-selling in Kenya has grown across various financial products, including insurance, mutual funds, stocks, bonds, and retirement savings plans.
CMA said it has taken steps to counter mis-selling by issuing public warnings about fraudulent schemes and enforcing regulations. A CMA spokesperson said in an interview Kenya’s regulatory framework is robust, aiming to prevent mis-selling and ensure all fund managers and customer-facing employees are properly qualified and trained.
These employees are required to complete a Securities Industry Certification Program, offered in collaboration with the UK-based Chartered Institute for Securities & Investment (CISI), within 12 months of appointment. For specific job functions, membership with the Institute of Certified Investment and Financial Analysts (ICIFA) is also mandatory.
To protect investors further, CMA advises the public to work only with licensed entities and approved products, listing all licensed entities on its website.
“The Capital Markets (Collective Investment Schemes) Regulations, 2023 and the Conduct of Business (Market Intermediaries) Regulations, 2011 establish robust frameworks to prevent mis-selling in Kenya’s capital markets. These regulations ensure that fund managers and market intermediaries uphold ethical standards and maintain transparency in their interactions with clients,” said the regulator.
To further protect investors, the Capital Markets Authority said it “urges the investing public to only invest through licensed entities and approved products. A regularly updated list of licensed entities is available on the Authority’s website.”
Afrasia Bank has threatened SBM Bank (Kenya) with a notice of instituting liquidation proceedings against should the bank fail to refund over Sh900 million that it had deposited in collapsed Chase Bank six years ago.
Last month, Justice Wilfrida Okwany ruled that SBM is culpable for all liabilities of Chase Bank which it acquired in 2018 including the monies deposited by Afrasia Bank.
The judge said the Transfer of Business Act was applicable in the deal and since SBM did not publish the mandatory notice under the law, it is liable for all Chase Bank dues.
In the notice published on local dailies, Afrasia said the money $7.5 million (Sh904 million) plus interest of $16645 (Sh2 million) should be paid in Mauritius or its lawyers Githii & Co Advocates.
“Further take notice that failure to pay the afore-stated amount shall result in Afrasia Bank limited filing for a liquidation order against the company,” the notice dated September 19 stated.
Suspect treasury bond transaction
In February the Mauritian lender had a run in with the Capital Markets Authority (CMA) over suspected fraudulent trade in treasury bonds.
It then launched inquiry to spotlight irregular trade where multimillion-shilling bond transactions saw SBM Bank lose an undetermined amount of cash.
At the heart of the matter was a treasury dealer and head of balance sheet management at SBM Bank, Mr Stephen Lagat, in August last year approved a transaction in which SBM Bank was duped into selling a bond at a price other than the prevailing market rate.
The effect of the malpractice, also referred to as “front-running”, is that it distorts the pricing of government securities and in effect the cost of domestic borrowing for Kenyan taxpayers.
The probe was to shed light on how the Treasury and taxpayers could be paying a hefty price for borrowing in a market fraught with irregular transactions involving dealers and stockbrokers.
Treasury bonds are the government’s most important avenue for bridging budget deficits by borrowing from the private sector.
By distorting the pricing of treasury bonds, dealers in effect inflate the national debt burden by exerting upward pressure on interest rates, which the Treasury pays on the issued bonds.
Some Treasury bond traders in commercial banks and brokers are believed to be skimming millions of shillings from off-the-market trading.
A crooked dealer or trader uses knowledge of customers’ orders to buy bonds from an investor who is selling at a lower price. The trader then sells the bonds to another person at a higher price and pockets the gain, often within a day.
The lender was however cleared.
SBM Bank four years ago bought Chase Bank, which collapsed on mismanagement and insider theft claims.
Chase Bank collapsed in 2016 under the weight of massive withdrawals from depositors after massive fraud including insider loans of more than Sh13.62 billion advanced to directors, shareholders, employees and associates were unearthed at the bank.
The bank collapsed when it had received Sh4.8 billion from creditors through a Sh10 billion bond issue.
The Central Bank of Kenya (CBK) appointed the Kenya Deposit Insurance Corporation (KDIC) as a receiver for the bank for a period of twelve months.
The CBK last year gave the nod to the KDIC to liquidate the assets of the bank that had not been auctioned to salvage some money for customers who had more than Sh100,000 in the bank.
In 2018, Mauritian lender, SBM Bank carved out 75 per cent of certain assets and liabilities from Chase Bank in what was considered as cherry-picking ‘good assets.’
During the Chase Bank deal, SBM valued the total assets acquired at Sh69.59 billion, with property, plant and equipment assigned a fair value of Sh1.25 billion.
Total liabilities were valued at Sh66.68 billion while deposits from non-bank customers were Sh56.9 billion.
Dyer and Blair Investment Bank has come under the spotlight following accusations of wash-sale trading scheme.
This a practice where the investor’s shares are sold without their permission at a lower price after which they’re are bought back at a higher price.
Kenya Insights has learnt that an investor has petitioned the parliament to intervene accusing the stock broker of selling his shares without his permission in fraud that cost him Sh19M.
By 2015, the investor Paul Matibo had invested a total of Sh27M in shares and cash at Dyer and Blair from ABC Capital and Kingdom Securities.
“That him in-spite of him not instructing the bank to make any transactions on his behalf, Ngei was shocked to learn between May and August 2015, the broker had committed his shares in a wash-sale scheme where profitable shares had been sold for low value and repurchased at a higher value,” the petition reads.
Same company
The petition adds that without Ngei’s authority, Dyer and Blair sold 22,700 shares in Kenol/Kobil Ltd. at Sh8.80 each on May 28,2015 and repurchased 8,300 shares in the same company at Sh8.80 per share on May 29,2015 then further sold 80,500 shares in the company on the same date at Sh8.60 per share.
On August 3,2015, Dyer and Blair again without express instructions or authority from Ngei sold 200,000 shares in Equity Bank for Sh37.75 each.
The broker then on August 6,2015, repurchased 100,000 shares in Equity Bank for Sh40 each and purchased a further 70,300 shares in the said bank for Sh42 each on August 13,2015.
Petition
“By engaging in the foregoing reckless, fraudulent, irregular and unregulated trading activities, Dyer and Blair Investment Bank exposed Ngei a colossal loss of Sh19.4M,” said the petition to parliament after Capital Markets Authority (CMA) reportedly failed to take action.
Ngei says that he enquired from the broker about the unexpected depreciation of his shares at the end of 2015, the bank falsely associated it with devaluation of shares.
However, contrary to the claims by the bank, Ngei established from the CDSC that Dyer and Blair had fraudulently traded in his shares without his permission.
Ngei lodged a complaint with the CMA the regulator of capital markets but in spite of the subsequent follow ups made on November 30 2020 and January 2022 to have his complaint addressed, the regulator turned a blind eye in a measure to protect the bank and the matter is yet to be addressed.
Therefore Ngei is asking the National Assembly through the Departmental Committee on Finance and National Planning to take the matter with a view of to recovering his losses from the broker and also punish CMA for in action.
The petition was made through Kitui Rural MP David Mboni Mwalika.
The bank has been faced with similar allegations before in what now appears to be common. Previously, a customer, a Margaret Mukuhi Njuguna alleged fraudulent transfer of Kshs 10,933,510.55 from her account without her knowledge.
Another instance, the bank’s executive was alleged to have approved a Sh26.2M payment to an impostor who supposedly used forged documents.
In 2010, a Mr Joseph Kimani, highlighted the fraudulent sale of his shares in KCB and EABL worth a total of over KShs 30,000.
The Star newspaper reported on a court ruling of a case involving James Mugo, a Dyer & Blair Investment Bank agent in Murang’a who admitted to swindling off Kshs 200,000 from a client, Ms Hellen Wambui.
In 2016, Dyer and Blair Investment Bank was accused of colluding with CFC Stanbic bank to defraud a client of millions in returns on his investment.
The High Court termed the incidents that led up to the crime as a complicated wave of deceit perpetuated by the two companies to trade on their client’s money without accounting for interest earned. John Kung’u Kiarie, a former director of Kenya Commercial Bank had invested KSh 100 million with Dyer and Blair who would invest his money in the bond markets among other places. Confident that his money was put to good use, Kiarie went on with his life until he found himself in problems with his then employer in which a criminal case was filed against him.
In the process of undergoing investigation, the Central Bank of Kenya Fraud Investigation Unit looked into his accounts and discovered that his monies were operational. As if in synchronization, Blair and Dyer offered to freeze Kiarie’s accounts without the fraud investigation unit asking them to back in 2003.
The CBK unit found that Blair and Dyer as well as CFC Stanbic continued holding on to the money illegally and even used it in trading their businesses without their client knowing. The criminal case against Kiarie ran from 2003 to 2007 when he filed the court case against Mbaru’s firm and the bank. He claimed KSh 465 million as returns on his investment but the court ordered the two defendants to pay Kiarie KSh 300 million plus interest since 2003. In total, the amount added up to KSh 418 million.
In 2016, Rwandan tobacco tycoon Tribert Ayabatwa Rujugiro filed a multimillion shilling suit against Kenyan investment bank Dyer & Blair, accusing the broker of selling his Safaricom shares and failing to speedily pass on the sale proceeds to him.
Mr Rujugiro wanted Dyer & Blair ordered to pay him damages for withholding proceeds of the share sale for 135 days, and for paying him after fluctuations of the US dollar rate negatively affected his returns.
In 2016, Dyer and Blair executive was accused of aiding a Sh100 billion money laundering scheme at one of Kenya’s largest chartered flight operators — Bluebird Aviation. The allegations made in court by a founding shareholder of the Wilson Airport-based carrier have sucked in Mohammed Hassan a former top executive of Dyer & Blair Investment Bank. Mr Hassan, who started off as a finance analyst at Dyer & Blair before rising to become the investment bank’s executive director, was accused of being the conveyor belt linking Bluebird’s accounts to the pockets of Mr Hassan’s partners.
Mr Hassan was Dyer & Blair’s executive director between 2003 and 2006, and was previously the investment bank’s general manager.
Yusuf Abdi Adan, the Bluebird Aviation shareholder, has claimed in court that his partners have been using Mr Hassan to fraudulently channel massive funds out of the company as part of a scheme to sideline him and pocket his rightful share of the company’s profits.
“The three directors have through Dyer & Blair invested massively in both local and international stocks and shares. They have also bought several properties in Nairobi, Coast and Rift Valley. In a single transaction involving NBK, the three directors paid Sh300 million in cash,” the Bluebird co-founder said on the claims that the bank was being used in money laundering.
Dyer & Blair Chairman and CEO Jimnah Mbaru is one of Kenya’s prominent investment bankers. He led a group of local shareholders in acquiring the entire shareholding of Dyer & Blair from Kenya Commercial Bank (KCB) in 1983.
Dyer & Blair was founded in 1954 in Nairobi as a partnership of stockbrokers Hickman and Grey. Ownership of the firm changed hands in 1956 to Derek Ingram Dyer & Patrick Murdoch Blair before it was acquired by KCB in 1973.Since Mbaru took over in 1983, the firm has played an instrumental role in some of the biggest deals by publicly listed firms across East Africa. It converted into a fully-fledged licensed investment bank in 2004.
The firm operates in East Africa through its wholly owned subsidiaries in Kenya, Uganda and Rwanda and is a member of the Nairobi Securities Exchange (NSE), Uganda Securities Exchange (USE) and the Rwanda Stock Exchange (RSE).
The Capital Markets Authority (CMA) is now staring at parliamentary scrutiny for failing to protect investors, following the proliferation of unregulated and illegal investment funds that have led to loss of investor funds in the country.
Cytonn which has for ages marketed the funds as private placements, a closed shop of a few sophisticated investors, limited to 100 investors and didn’t fall under CMA’s radar. However, court filings indicated that Cytonn had raised money from 3,000 investors in breach of regulations that demand funds raised through private placements limits to no more than 100 people.
The Garissa town legislator also indicated various instances which he claimed was a backslide of the CMA to regulate the capital markets effectively in total disregard of Section 11 of the Capital Markets Act.
Over time, investor confidence has been eroded on Kenya’s capital markets, with most investors sharing the sentiments that the Capital Markets watchdog has done little in terms of protecting the retail investors. In recent times however, CMA has taken regulatory action against some of the capital markets illegalities, the most recent being over the Kenol Kobil insider trading.
In addition, the suspension of Deacons, Kenya Airways, ARM Cement, National Bank and briefly Nairobi Business Venture, Marshals East Africa, Atlas, African Lakes Corporation (Africa Online) and Unilever, all have shaken investor confidence, which CMA is ultimately mandated to protect.
MP Duale’s Citations Over CMA
The 2005 Imperial Bank corporate bond valued at Kes 2.0 billion to bondholders which was issued despite having ongoing financial fraud within the bank.
Clearing Chase Bank to issue Kes 4.8 billion worth of bonds in 2005, after which the bank fell into receivership.
Nakumatt Holdings Supermarkets Kes 4 billion commercial paper issuance in 2018. (In default)
Aden Duale, now wants the CMA to disclose the total number of unregulated capital market products in the country including the number of invested persons and the role of the regulator in the proliferation of illegal investment funds.
Further to this, the legislator also wants the effectiveness and efficiency of the CMA established and the total number of firms penalized in last five years including remedial actions issued by the regulator listed
