Aggrieved Cytonn investors plan class suit

Aggrieved investors in the Cytonn High Yield Solutions (CYHS) fund by Cytonn Investment now plan a class action suit against the company.

A public notice published in local dailies on Friday reveals plans for agitated investors to group up and coordinate a joint litigation against Cytonn.

“Please join a group of similar aggrieved investors that have come together to coordinate a class action civil suit to recover your full investment and returns on the investment and institute criminal and other proceedings against the perpetrators of the scheme,” reads part of the notice which further enlists contacts to the coalition of aggrieved investors.

The contact list includes an email address, mobile-phone lines and a telegram group dubbed ‘AGGRIEVED CYTONN HYS INVESTORS’.

The planned class suit sets up Cytonn Investment for a legal showdown which further implicates the Capital Markets Authority (CMA), the country’s markets regulator.

What is the suit about?

The planned class suit relates to the non-payment of investors in CYHS after the end of tenures for the investments sunk primarily to real estate projects.

The aggrieved investors covers an elite group of Kenyans referred as ‘sophisticated investors’ by the CMA and who sunk a minimum Ksh.1 million in the fund and expected a return upwards of 14 per cent.

At the end of the investing period however, Cytonn has been unable to reimburse the investments and the accompanying interest sighting liquidity challenges in respect to the fund.

Last year, the board managing the CYHS approved a one year moratorium allowing Cytonn to skip repayments to investors.

Earlier this year, Cytonn recommended a further roll over of the funds falling due or an alternative debt to real estate conversion under which investors would receive housing units under the company’s wing.

However, the conversion requires investors to top up funds to receive the units, an aspect that has further aggrieved the investors as they doubt the legitimacy of Cytonn and its respective products.

CYHS has about 4,000 invested Kenyans for a total of Ksh.13.5 billion.

From this pool, tens of investors have raised concerns over the management of the fund with the CMA while at least two investors have already sued the company.

On its part, Cytonn insists the issues to be of an administrative nature and sued the CMA earlier this week as it laments criminal proceedings against the fund and staff.

The aggrieved investors want the courts to force Cytonn to make reimbursements on the investments including interest accrued.

Meanwhile, Cytonn has been hoping for reprieve from the pool of investors as it works to enhance the liquidity of CYHS to enable payments.

Cytonn’s real estate has an estimated asset base of over Ksh.100 billion mostly made up of residential real-estate projects.