This archive report was first published on 24 June 2021.
Published on June 24, 2021, a scandal has rocked the investment firm Cytonn, leaving the Capital Markets Authority (CMA) in a precarious position.
Garissa Township MP Aden Duale has asked Parliament to take action against the CMA for its failure to regulate the capital markets effectively, citing instances of negligence that have resulted in estimated losses of Sh. 36.8 billion.
According to Duale, the CMA's failure to regulate the capital markets has brought into question its effectiveness and efficiency in carrying out its regulatory role.
He pointed to several instances where the CMA failed to regulate the capital markets effectively, including the case of Imperial Bank Ltd, which allotted Sh. 2 billion to bondholders in 2005 despite ongoing financial fraud within the bank.
The bank eventually collapsed, taking investors' funds with it, under the watch of the CMA.
Duale also cited the case of Chase Bank, which was cleared by the CMA to issue Sh4.8 billion worth of bonds in 2005, only to fall into receivership later.
He holds that the bank's subsequent fall into receivership and sale to SBM Holdings was a result of poor regulatory oversight by the CMA.
Additionally, Duale cited the case of Nakumatt Holdings Supermarkets, which issued Sh. 4 billion commercial paper in 2018 and defaulted on it, resulting in write-offs by banks and suppliers.
