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{
    "id": 1341723,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1341723/?format=api",
    "text_counter": 326,
    "type": "speech",
    "speaker_name": "Kitui East, UDA",
    "speaker_title": "Hon. Nimrod Mbai",
    "speaker": null,
    "content": "2. Engages the Cytonn Investments Limited and its partners to clarify how they intend to fulfill their agreements with the investors, depositors and the aforementioned Ridge Investment Projects. 3. Holds the Chief Executive Officer of Cytonn as responsible for the mismanagement and secures the timely refund of investors’ deposit money. 4. Make any other suitable recommendation it deems fit in addressing issues raised in the petition. Hon. Temporary Speaker, upon hearing from the petitioners and witnesses, the Committee made determination on the prayers sought in the Petition as follows: Summon the Capital Markets Authority (CMA) to establish how they intend to operationalise the investor compensation fund. To grant compensation to investors who suffer pecuniary losses resulting from failure of an unlicensed stoke broker or a dealer to meet his contractual obligations as stipulated in Section 18 (1) of the CMA Act. Upon consideration of this prayer, the Committee resolved that CYHS was an unregulated product which guaranteed returns by Cytonn. Cytonn has not converted CWHS to CYHS as advised by CMA where the clients in CHYS would convert into a CHYF and eventually benefit from the investor compensation fund in case of any loss. Section 18 of the Act and Regulation 64 of the CMA Licensing Regulations (General Regulations) 2002 provides that investors in the Capital market products and/or services are entitled for compensation from the fund if they suffer losses resulting from the failure of a licensed stoke broker or dealer to meet his contractual obligations and paying beneficiaries from collected unclaimed dividends when they resurface. The investors in CHWS are not liable for compensation from the fund as the product is unregulated. Further, Regulation 69 requires that investors shall apply for CMA for compensation from the Compensation Fund in cash or securities equal to the net loss following a loss due to failure of stock brokers, dealers or investors, banks carrying out any stockbroking business or dealing operations. To meet its contractual obligations, therefore, investors in CHYS are not entitled to benefits from the Investor Compensation Fund in case they suffer loss of their investments. On engagements with Cytonn Investments Limited and its partners to clarify how they intended to fulfil their engagements with investors/depositors of the aforementioned Ridge Development Projects, upon consideration of this prayer, the Committee resolved: 1. The product by Cytonn high yield solutions CYHS and CPA are unregulated products and that Cytonn management PLC has not converted CYHS to CYHF as advised by CMA where the clients in the CHYS would convert into a regulated CHYF. During the presentation of the petition before the Committee, liquidation orders against certain entities CHYS and CPN under Cytonn were issued by the courts whereupon an official receiver was appointed. The order was made against among other properties the Ridge which is part of this Petition. Therefore, the court process of liquidation be allowed to proceed to its logical conclusion. This will allow the realisation of funds to compensate the investors. Therefore, the Committee recommends that the official receiver speeds up the process of liquidation and reports to the National Assembly within six months from the date of adoption. 2. All Chief Executive Officers of Cytonn are responsible for the mismanagement and secure the timely refund of investors and depositors’ money. 3. The CMA fast-tracks the alternative funds regulation for private markets so as to seal loopholes by rogue operators. The House amends the Capital Markets The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}