This archive report was first published on 6 August 2019.
On August 6, 2019, the Capital Markets Authority (CMA) seized Sh458 million gains that it said the insider trading suspects stood to earn from the KenolKobil takeover after buying the stock on the cheap from unsuspecting investors.
Stock dealer Aly-Khan Satchu, the CEO of Rich Management, was at the center of the scandal. He hired Senior Counsel Ahmednasir Abdullahi to defend him against charges of insider trading.
Mr. Satchu initially attempted to block the hearing by the CMA-appointed ad hoc committee, which he described as a 'kangaroo court', 'mickey mouse', a 'mongrel', and a 'rogue assembly' assuming powers it did not have.
However, the committee, comprising retired Chief Justice Willy Mutunga, academic Jim McFie, Patricia Kiwanuka, president of the CFA Society of East Africa, and Anne Eriksson, former country and senior regional partner PricewaterhouseCoopers, pressed on with the hearing.
Mr. Satchu claimed that he had interviewed KenolKobil CEO David Ohana in 2017 and that he bought the oil firm's shares because in October the market had collapsed and the share was mispriced, hence it had an upside.
However, he was hard-pressed to explain whether it was a common habit to share trading profits with clients since he had asked his customers to put in money after which they would share capital gains on a 50/50 basis, which he described as a 'marketing gimmick'.
Mr. Satchu admitted to having committed an irregularity when he asked his clients to doctor letters so that they would look like they had instructed him to buy the shares.
The most solid evidence against Mr. Satchu was the admission by Andre De Simone, former chief executive of stockbrokerage firm Kestrel Capital, of having tipped off Mr. Satchu and another stocks agent, Mr. Kunal Bid, of the impending transaction, giving the duo privileged information that they used to trade on the Nairobi Securities Exchange (NSE) listed stock days to the private transaction.
