CMA, Cytonn clash ropes in parliament
Tuesday August 24 2021
Cytonn Investments petitioned Kenyan MPs to probe the appointment of Wycliffe Shamiah as the chief executive of the CMA, arguing that the appointment was made by a board whose legality is subject to court proceedings. PHOTO | FILE
Embattled Cytonn Investments Management Ltd petitioned Kenyan lawmakers to probe the appointment of the Capital Markets Authority (CMA) chief executive Wycliffe Shamiah, including his conduct and his regulatory policies. The dispute over the trading of illegal investment products has spilled to the floor of the House to the bewilderment of the investing public.
The markets regulator and the fund management firm are locked in a tussle over what the regulator deems sale of “unlicensed” and “unregulated” investment products to an unsuspecting public, putting at risk more than Ksh13 billion ($119.26 million) of investment funds. Recently, the regulator banned the licensed portion of the business — Cytonn Asset managers — from signing new clients until they change the name of both the licensed business and the regulated products to stop confusing the investors.
Cytonn Investments, through Apollo & Company Advocates, recently petitioned the National Assembly to probe the appointment of Shamiah as the chief executive of the CMA effective January 1, 2020, arguing that the appointment was made by a board whose legality is subject to court proceedings. Prior to his appointment, Mr Shamiah served as the director of market operations since November 2011, and has held multiple senior positions in market supervision, research, financial analysis and compliance at the authority.
According to the petition dated August 17, Cytonn said Mr Shamiah has continued to promote policies that favour the banking sector while stifling the capital markets in a move that has led to the dominance of banks in the Kenyan economy causing entrepreneurs and businesses to rely on expensive bank loans.
“As a consequence of policies stifling capital markets to the benefit of the banking sector, he has made it difficult to access funding and when accessed the interest rates Kenyans pay are very high,” Cytonn said.
The firm also accuses Mr Shamiah of failing to protect investors’ interests leading to a loss of a staggering Ksh180 billion ($1.65 billion) worth of investor wealth while doing very little or not carrying out credible investigations whenever investors lose money.
Other accusations against the CMA boss include failure to put in place policies that support the financing of the government’s affordable housing plan, failure to put in place money market portfolio disclosures and violation of fair administration of justice.
When contacted, Mr Shamiah declined to comment on the petition saying he would do it an appropriate time. “I will respond accordingly when the right time comes,” Mr Shamiah told The EastAfrican.
In July, members of parliament through the Committee on Finance and National Planning queried the regulator on why there is an increase in the number of unregulated and illegal investments products in the market, followed a petition by the Garissa town lawmaker Aden Duale.
According to Duale, investors in the capital markets have lost over Ksh36 billion ($330.27 million) under the regulator’s watch. The Committee committed to expand the enquiry to other parties including the Central Bank, Cytonn managers and other entities that have orchestrated the loss of investor funds.