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{
    "id": 1081636,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1081636/?format=api",
    "text_counter": 127,
    "type": "speech",
    "speaker_name": "Garissa Township, JP",
    "speaker_title": "Hon. Aden Duale",
    "speaker": {
        "id": 15,
        "legal_name": "Aden Bare Duale",
        "slug": "aden-duale"
    },
    "content": "In 2018, Nakumatt Holdings Supermarket issued a Kshs4 billion commercial paper and thereafter defaulted on the same, resulting in the write-offs by banks and suppliers. And thousands of Kenyans lost billions of shillings to Nakumatt. Nobody has paid them their money. All this under the watch of CMA. In 2019, Cytonn Investments further issued, through CMA, a Cytonn High Yield Solution, with an attractive 18 per cent returns per annum, collecting over Kshs10 billion from investors, only for CMA to last week issue a statement that Cytonn is not a licensed and approved entity, knowing all along that they were in the market. Talk of the Ekeza SACCO of the famous Bishop Gakuyo. Talk of Suraya Investments. Talk of the DECI pyramid scheme. In all these, Kenyans lost huge resources. Despite CMA securities, public offers, listings and disclosures regulations which restrict private offers to 100 members, Cytonn High Yield Solution is unregulated but ironically approved collective investment vehicle of 4,000 members who invested Kshs10 billion. Moreover, despite the requirements of the Capital Markets Act on disclosure obligations, which require a fund manager or an investment adviser to fully disclose to any client or prospective client the nature of the advisory service offered or fees to be charged in such service, Cytonn Investments breached this provision of the law by providing to investors two products with similar names while one was without regulatory approval. Lastly, despite the requirements of the Act, which prohibits investment funds from guaranteeing clients that a specific result will be achieved arising from the rendered advice, Cytonn has continued to promise innocent Kenyans a return of 18 per cent in the Cytonn High Yield Solution under the watchful eye and ear of CMA. The estimated total loss of investment by innocent Kenyans due to the negligence of CMA in terms of regulation is approximately Kshs36.8 billion. To put this into perspective, the figure is equivalent to one-half of the total capital, which is Kshs72.5 billion, of customers’ deposit currently held at Family Bank Limited, a second-tier bank as of 31st March 2020. It is on account of these grave concerns relating to the efficiency of CMA in regulating the capital markets industry and the continued loss of investments by innocent Kenyans that I seek for a statement from the Chairperson of the Departmental Committee on Finance and National Planning on the following: (i) What is the total number of all unregulated capital markets products in the country and the number of investors in the said products? (ii) What is the role of CMA in the proliferation of illegal investment funds in the capital markets in Kenya? (iii) What is the effectiveness and efficiency of CMA in regulating capital markets in Kenya? (iv) What is the total number of funds penalized by CMA in the last five years and the remedial action taken on behalf of investors who lost their funds? Thank you, Hon. Speaker."
}