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Cytonn Sues CMA Over Frivolous Investigations, Seeking Interpretation of Private Offers

Cytonn Investment PLC has sued the Capital Markets Authority (CMA) for sanctioning criminal investigations against the company over its two money market products, the Cytonn High Yield Solutions and Cytonn Private Notes (CPN).

In Court filings dated June 21, 2021, Cytonn led by its board members Edwin Dande (CEO), Patricia Wanjama and Elizabeth Nkukuu says the action by CMA was not warranted, accusing the regulator of acting in bad faith on a product that CMA was part of naming.

Investors who sunk their funds in the two offerings were forced to extend a moratorium on payments from the funds or alternatively take up a debt to real estate conversion across the 10 projects.

Read: Cytonn Accuses CMA Of Malice Over Statement On CHYS

“For over seven years now, the 1st respondent (CMA) has been engaging the 1st interested party (Cytonn Investment) on the workings and regulation of, first, the second interested party (CYHS) and recently the 3rd interested party (CPN). The DCI has since proceeded to issue arbitrary and endless summons to the applicants and other employees of Cytonn Group of Companies for inquiry into issues that until recently have been on the pipeline of resolution between the parties,” Cytonn said.

In the suit, which has been filed under the certificate of urgency, Cytonn wants the action by CMA declared illegal and the regulator stopped from “aggravating issues which were nearing resolve”.

“The continued interrogations and inquiries are founded on malice, breach of trust, bad faith, illegalities and on an improper factual and legal foundation,” the suit adds.

Read Also: CHYF Video Making Rounds Is Factually Incorrect and Misleading – Cytonn

CMA has been accusing Cytonn of running the two products which are privately offered.

In a statement last week, CMA stated that Cytonn Investments is not a licensed and approved entity, urging investors who are affected by investing in unregulated products to report to the Capital Markets Fraud Investigation Unit (CMFIU), which is the Police Unit attached to the Capital Markets Authority.

“CMFIU is currently investigating the issue for criminal violations for investors in the Cytonn High Yield Solutions (CHYS),’’ said Shamiah.

Read Also: T-bills Auctions Undersubscribed In January – Cytonn Report

Cytonn on its part is claiming CMA is just continuing its usual discriminatory practices because private offers are lawful and that there are many other unregulated products issued by Britam, Nabo Capital, MyCredit, Car&General, KK Security, ASL Credit, and Watu Credit.

Additionally, Edwin Dande asserted in a social media post that private offers have performed better than some of CMA’s regulated offers such Imperial bank bond, Chase bank bond, ARM commercial paper, Nakumatt Commercial Paper, Amana Money Market fund, Uchumi, Mumias, CMC, etc, where investors have walked away empty-handed. Both public and private offers are essential to our capital markets, claims Dande.

CMA however acknowledged that it has licensed Cytonn Asset Management Limited, which is licensed as a Fund Manager managing the following regulated funds: Cytonn Money Market Fund; Cytonn Balanced Fund; Cytonn Equity Fund; Cytonn Africa Financial Services Fund; Cytonn Money Market Fund (USD); and Cytonn High Yield Fund.

According to Cytonn, the squables surrounding CHYS and CPN are purely administrative in nature, and not in any way criminal.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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