Tough penalties plan for analysts without licences

Individuals practising as financial, securities, and investment analysts without a licence will be fined of up to Sh500,000 and/or serve two years in jail if a proposed law comes into force.

The Securities and Investment Analysts Bill, 2014, that is before Parliament, seeks to enhance professional conduct among financial, securities, and investment analysts.

According to the Bill, all persons seeking to practise as certified financial, securities, and investment analysts must be registered by the Registration Board of the Institute of Certified Securities and Investment Analysts (ICSIA), which the law seeks to establish.

“No person shall practise as a certified financial, securities, and investment analyst unless the person is registered... and holds a practising certificate or an annual licence,” the Bill states.

Investment advice

The Bill describes a financial, securities, and investment analyst as a person who offers to perform or performs services involving investment advice or financial decisions, investment transactions, accounts, or records. Such persons also perform or offer to perform services involving the verification or certification of investments, securities, or related advice.

Only persons who have sat and passed the final certified securities and investment analysts examination will be eligible for a practising certificate after paying the required fees.

The holder of a certificate intending to practise as a company under sole proprietorship or partnership will also have to apply for an annual licensing fee.

A practising financial, securities, or investment analyst is also not allowed to enter into partnership with a person who does not have a practising certificate.

“The council may, in consultation with the examinations board, from time to time... approve qualifications which it considers sufficient to allow a person to be registered,” the Bill says.

 Mr Geoffrey Injeni, a lecturer at the Strathmore Business School, says the regulation is long overdue as there is currently no framework for security analysts in the country.

Professional conduct

“The Kenya Accountants and Secretaries National Examinations Board has a certificate and professional qualification for securities and investment analysts but there is no such body for accountants to provide recognition and regulation of their conduct,” Mr Injeni said in an email response.

The vice-chairman of the Nairobi Securities Exchange (NSE), Mr Bob Karina, said the Bill is meant to ensure that individuals working in the financial, securities, and investment markets have a code of professional conduct.

It is expected that it would promote observation of uniform standards of professional conduct and ensure that practitioners are qualified to carry out their duties.

“There could be many people out there calling themselves financial analysts but they are not qualified. This is a vetting mechanism and one that sets standards for industry practitioners,” Mr Karina said on the phone.

Some of the functions the proposed law vests in the ICSIA will be to advise the National Treasury Cabinet secretary on matters related to securities and investments in all sectors of the economy. The institute would also advise the regulator responsible for capital markets on  licensing, finance, securities, and investment analysis.

While the Capital Markets Authority (CMA) regulates how participants in the capital markets behave with a bias on companies that are listed and those wishing to raise finance from the capital markets, ICSIA will be mainly concerned with regulating the conduct of its members who may or may not take part in the activities of the capital markets.

“Members of the institute have to comply with CMA regulations as part of their professional requirements and to promote capital markets’ integrity,” Mr Injeni said.