•The cash is related to suspicious trades initiated through 14 accounts that were frozen in October 2018 when the buyout of KenolKobil was announced.
•The Authority has referred the matter to the Director of Public Prosecution for consideration of criminal investigations on market manipulation.
Capital Markets Authority has earned Sh374.9 million in penalties from traders engaged in irregular bond trading.
The penalties are twice the amount of profit accrued from the illegal trade.
The amount was earned from penalising former CBA Capital executive David Tumaini Sh166.9 million for engaging in front running of clients in Treasury bonds between 2016 and 2017.
The balance Sh208 million was earned from penalising bond trader Roderick Muhoro.
Muhoro is accused to have conspired with Tumaini to defraud investors in bond transactions alongside a second broker Stephen Njuge from African Investment Bank.
However, CMA has since exonerated Njunge’s from being involved in insider trading.
Besides the CBA case, the market regulator further seized Sh458 million related to suspicious trades at listed Kenolkobil.
The cash is related to suspicious trades initiated through 14 accounts that were frozen in October 2018 when the buyout of KenolKobil was announced.
This brings the total amount earned by the authority on penalties and recoveries between the first quarter ending March 31 to date to Sh 832.9 million.
The funds surrendered related to 90 percent of the quantum of suspicious trades identified.
A quarter one soundness report by the authority indicatees that the recovered funds have been paid into the Investor Compensation Fund.
Apart from the penalty, the victims have been banned from conducting bonds trading for a period of 10 years.
This is for illegally realising a capital gain of Sh104 million by taking advantage of the price differential before the client orders were executed.
The gains would later be shared between Muhoro and the fixed income dealers at brokerage firms in contravention of provisions of the Capital Markets Act.
The Authority is set to refer the matter to the Director of Public Prosecution for consideration of criminal investigations on market manipulation.
Also to be notified is the Asset Recovery Agency to trace and recover assets allegedly bought with illegal capital gains; and the Institute of Certified Public Accountants of Kenya for consideration of disciplinary action for professional misconduct.
Upon review of the Kenolkobil investigation findings, the CMA Board initiated enforcement proceedings against Kestrel Capital Executive Director, Andre DeSimone, Kestrel Capital Chairman & Founder, Charles Field-Marsham, and their stockbroking agent, Aly Khan Satchu.
The investigation findings did not establish evidence of potential misconduct with regard to the KenolKobil CEO David Ohana hence no enforcement proceedings were initiated against him.