CMA to pay whistleblowers up to Sh5m - Daily Nation

CMA to pay whistleblowers up to Sh5m

Monday December 3 2018

The reward scheme is part of wider efforts by

The reward scheme is part of wider efforts by the CMA to tighten the noose on market cheats. FILE PHOTO | NMG 

By CHARLES MWANIKI
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The Capital Markets Authority (CMA) will reward whistle-blowers who report market malpractices with up to Sh5 million if proposals contained in the CMA Amendment Bill 2018 are passed by Parliament.

The CMA launched a whistle-blower portal in July 2016, hoping that the public would use it to report bad apples in the capital markets.

The regulator last year admitted that it needed to put in a reward scheme after going for a year without getting tips on the portal. CMA officers are, however, not eligible for this reward.

The rewards apply to those reporting ill-gotten gains where those harmed are not specifically identifiable—recoveries of which are usually put into the investor compensation fund.

“The reward payable…shall be three per cent of the amount recovered subject to a maximum of five million shillings, and shall be paid before the recovered sums of money are transferred to the fund,” reads the Bill in part.

The amendment Bill was tabled in Parliament in July, and is awaiting the second and third readings before being signed into law.

Reports received will be forwarded to the Capital Markets Fraud Investigation Unit for an in-depth probe.

This reward scheme is part of wider efforts by the CMA to tighten the noose on market cheats, with the amendment Bill also refining the rules on front running, bringing to the fore offences of insider trading based on privileged or prior information about companies.

Although insider trading is already an offence in Kenya, there have been few reported convictions over the same in the past, which has risked the reputation of the stock market among investors.

Last month the CMA flexed its muscle in summoning independent trader and analyst Aly-Khan Satchu over suspicious trades on the KenolKobil stock days prior to the announcement of a takeover offer by French firm Rubis Energie.