Sunday, September 5, 2010

Ngenye Kariuki investors in the dark as CMA awaits broker's revival

By James Anyanzwa

The Capital Markets Authority (CMA) has extended the statutory management period of Ngenye Kariuki & Company Ltd, and maintains optimism that the troubled brokerage firm will be revived.

The authority’s statutory manager, Wycliffe Shamiah, has been given six more months in the hope that he will revitalise the company, and protect the investors’ hard-earned wealth.

CMA appointed Shamiah with effect from February 5 for a period of six months, to trace and preserve any assets of the company, address the challenges facing the company, and give it a chance to revive its business.

Ironically, none of the previous firms put in statutory management has ever survived. And Ngenye Kariuki is believed to have joined the bandwagon of Francis Thuo & Partners, Nyaga Stockbrokers, and Discount Securities Ltd (DSL), which have all fallen by the wayside.

Shamiah was also a co-statutory manager at the Nairobi stock exchange (NSE) who managed the collapsed Nyaga stockbrokerage firm.

"We have not received any updates on Ngenye Kariuki. It just seems this case is as good as over. CMA has never put any one under receivership which then came back," an industry insider who did not want to be named told The Standard.

The financial status of the broker, however, still remains uncertain, even after the CMA claimed there were on-going negotiations with the parties involved to restructure the company’s debts with financial institutions and trade creditors, and inject additional capital from the existing shareholders, and/or strategic partners.

"The negotiations are at an advanced stage. We are unable to reveal the details as this could be prejudicial to agreements already reached," the authority said in an e-mailed statement to The Standard.

"The statutory management period was extended for a further six months to allow the statutory manager to continue to oversee the restructuring process in the interest of investors and wider capital market policy issues."

The CMA reckons that the last six months of Ngenye Kariuki’s statutory management were focused on receiving and verifying claims from clients and other creditors, evaluating the capital structure of the firm and recommending any restructuring or re-organisation, and reviewing of the company’s management systems and reorganise them to address existing challenges.

The process of lodging claims by the company’s investors, customers and creditors began on March 1. Interestingly, while close to 150,000 CDS account holders formerly with DSL have since been transferred to the custody of the Cooperative Bank, where they can trade through the bank’s stock brokerage arm, Kingdom Securities Ltd, claimants of the collapsed broker are still groping in darkness over compensation 18 months after the broker was put under statutory management.

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