CMA set to recover Ksh. 208M from illegal trading 

Written By: Beth Nyaga


The Capital Markets Authority (CMA) has taken enforcement action against Rodrick Muhoro, a bond trader, following the conclusion of investigations with respect to the allegation of irregular trading of Government Securities in 2016 and 2017.

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CMA has imposed a financial penalty of Ksh 208 million being twice the amount of benefit Muhoro received from irregular trading and banned him from conducting bonds trading for a period of 10 years.

According to the investigations, Muhoro conspired with brokers to defraud investors in bond transactions undertaken between January 2016 and June 2017 through front running.

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This happened when Muhoro colluded with fixed income dealers at brokerage firms through the creation of artificial arbitrage opportunities, thereby realising a capital gain of Ksh 104 million by taking advantage of the price differential before the client orders were executed.

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The gains would later be shared between Muhoro and fixed income dealers at brokerage firms in contravention of provisions of the Capital Markets Act.

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Frontrunning is a market manipulation scheme involving an unethical and illegal trading practice in which a broker with advance knowledge of a specific market orders with price differentials of a financial security for clients earns an arbitrage  profit by placing an order for their own account or a person associated with the broker in advance of the client’s orders.

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The Authority will refer the matter to the Director of Public Prosecution for consideration of criminal investigations on market manipulation; the Asset Recovery Agency to trace and recover assets allegedly bought with illegal capital gains; and the Institute of Certified Public Accountants of Kenya for consideration of disciplinary action for professional misconduct.


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