CMA SHOULD BE EMPOWERED TO PROSECUTE STOCK MARKET CROOKS

The colapse of Francis Thuo and Partners, Nyaga stock brokers and Discount Stock brokers is still very fresh in my mind. The colapse of the three stock brokers in quick succession in a span of three years triggered a confidence crisis in Kenya capital market. The three stock brokers collapsed as a result of a huge debt incurred through unauthorised sale of of investors shares. They held an estimated sh 2.7 billion of investors money at the time of collapse.

These are companies which were controlled by greedy self seeking individuals who only cared about maximizing profits for themselves. I can just imagine the shock of an investor who has built his investment portofolio for years to cater for his retirement,only to find that his broker sold all his shares long ago without his knowledge.And while all of this was happening, the Capital Markets Authority was unable to protect him from these stock market criminals.

It is about time CMA was given power to investigate, ban individuals from trading and shut down stock brokers found in breach of trading rules.Therefore, the responsibility lies with the Kenya parliament to to pass new laws that will give CMA the power to supervise the capital market.

The new laws should also free CMA from Treasury`s control and turn it into an independent institution with a board free from political control.This will help stop politicians from dishing out key jobs to their unqualified political cronies at the expense of qualified professionals.

A majority of CMA board members should come from the private sector. Currently the board is made up of the Attorney General, the Central bank Governer, the Finance permanent secretary and the Economic secretary. The Finance Minister Picks the rest of the board members.

But there is fear that reduction of government control will leave CMA without any money to perform its functions. Well that fear is understandable but CMA should adopt a hybrid financing model with most of the financing coming from the market and the rest from treasury.Currently CMA has been making a good income as a result of increased earnings from commission fees charged on new market products and listing fees from bonds and IPOs.