CMA on the spot as Kenyans lose billions in botched investments

The Capital Markets Authority (CMA) has been put on the spot over the loss of public funds to botched investments.

On Wednesday, Garissa town Member of Parliament Aden Duale tore into the markets regulator oversight role as he asked the National Assembly Finance and National Panning Committee to probe the matter.

“I seek to request a statement from the Chairperson of the Departmental Committee on Finance and National Planning regarding CMA’s failure to regulate the capital markets industry leading to loss of funds and investments of many innocent Kenyans,” Duale stated.

According to Duale, the markets regulator is failing in its principal role leading to recent investment failures and the proliferation of unregulated and illegal investment funds.

While citing the recent plight by investors in the Cytonn High Yield Solutions (CYHS) fund by Cytonn Investment, Duale expressed his amusement at the regulators dismissal of the firm as neither a licensed nor approved entity despite raising nearly Ksh.14 billion from the public.

Ksh.36.8 billion

Duale estimates total losses of investments due to ‘negligence’ by the CMA at Ksh.36.8 billion.

This to include Ksh.2 billion in loses by Imperial bank bondholders after the bank’s collapse in 2006, Ksh.4.8 billion in lost bond investments in the grounded Chase Bank.

Duale further cites Ksh.4 billion lost commercial papers in the now defunct retailer Nakumatt even as he cast doubts on the status of the CHYS fund.

The Garissa Township representative 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, Duale 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.