Former CEO of Kenya’s Kestrel Capital fined KSH 2.5 million
The former head of one of Kenya’s biggest stockbrokers faces a 2.5 million shillings ($24,354.60) fine by the market regulator for sharing price-sensitive information with two traders.
Andre DeSimone, who left his post as chief executive of Kestrel Capital in April after the insider trading allegations, has also been banned by the Capital Markets Authority of Kenya (CMA) from holding a senior role in a listed firm or a brokerage for a year.
The CMA had started its investigation after noticing irregular share trades around the announcement of a takeover offer for KenolKobil by French fuel storage and distribution company Rubis last October.
The Nairobi-based Kestrel acted as the transaction adviser for KenolKobil in that deal.
The CMA said it established that DeSimone disclosed price-sensitive material relating to the impending takeover of KenolKobil by Rubis to two stockbroking agents Aly Khan Satchu and Kunal Bid, who were also investigated.
“DeSimone disclosed price-sensitive, material, non-public information on the KenolKobil transaction… to the two identified stockbroker agents… otherwise than in the proper performance of his functions,” the CM said in a statement after a hearing.
These two then bought, advised their clients to buy or bought on their behalf about 59 million KenolKobil shares in the week before the takeover announcement, the CM said.
The CM ruled that Satchu should give up 4.69 million shillings in commissions from the suspect trades. The regulator said Bid had been asked to give up 23.41 million shillings in gains from the trading accounts he managed.
Satchu has also been banned from holding a key post with a listed company or a brokerage for a period of three years.
The CM said Kestrel voluntarily gave up 9.86 million shillings in commissions on the trades executed through the two agents, without accepting or denying liability, thus ending the investigation against the brokerage, CM said.
Financial regulators in Kenya, including the central bank, have been stepping up efforts to stop the flow of money from suspicious transactions through the system as it seeks to establish Nairobi as an international financial hub.