I believe somebody or an institution is sleeping on their job, how can this happen? Gives credence to not so ethical activities around the NSE. How do you just dish 100m to a company known for dishonest activities? News below from BDAfrica.com
February 12, 2008: Exactly a year after the dramatic collapse of a stock broker left the investing fraternity reeling with shock and disbelief, a similar crisis was looming at the Nairobi Stock Exchange aided by the complicity of a hesitant regulator.
The broker, however, got a lifeline yesterday after the Nairobi Stock Exchange (NSE) gave it a Sh100 million rescue package to “support investors who had bought shares through it.”
A CMA inspection report indicates that for almost two years, Nyaga has been selling investors’ shares without the their consent, only to restore them after individual customers lodged complaints.
“Following intensified surveillance reviews, it was noted that the company has been illegally selling clients’ shares and buying the same quantity of shares through the normal board,” states a CMA report prepared after the December audit.
The report then details how the broker sells clients’ shares through the NSE prompt board (which takes one day to settle) but then takes four days to settle purchase orders for the same shares through the normal board, in the process bagging all profits that accrue from a slide in prices within those four days.
“This is a manipulative way of temporarily sorting out working capital shortfalls,” says the report. “This therefore means that bank balances change significantly everyday hence the balances may not be reliable.”