Tsavo Securities stripped of licence over bonds fraud

The Capital Markets Authority has revoked the licence of Tsavo Securities, an investment advisory firm partly owned by controversial trader Fred Mweni.

This comes after more than a year of feuding between Mr Mweni, his firm, Tsavo Securities, and the Capital Markets Authority (CMA) sparked by unauthorised dealing in government securities.

The CMA, in last Friday’s Gazette notice, also revoked the licences of three other companies, saying they expressed unwillingness to continue engaging in the capital market business.

Revoked

The firms affected are Equatorial Commercial Bank’s authorised depository licence, the investment advisory licences of Franklin Management Consultants Ltd, and Executive & Corporate Advisory Services, Kenya, Ltd.

“…of their own volition and request, the companies set out in the schedule hereto do not intend to continue carrying out capital markets activities,” CMA’s acting chief executive officer Paul Muthaura said in the Gazette notice published on Friday 11.

The revocation of Tsavo Securities’ investment advisory licence marks the end of an era for Mr Mweni in the capital markets business. The regulator had variously accused him of fraudulently engaging in the multi-billion bonds trading market.

Following the embargo slapped on him, the CMA said he wrongly used Tsavo Securities’ investment advisory services licence to illegally engage in the stock brokerage and bond trading business.
His licence restricted him to only offering investment advisory services to firms and individuals.

Surrender gains

Mr Mweni would later in December 2012 admit that he was not authorised to deal in stock brokerage transactions or bonds trading despite being one of the brains behind the setting up of fixed income transactions in the capital markets.

Following the ban, Tsavo Securities was required to surrender capital gains worth Sh3.85 million earned from the purchase and sale of the discounted fraudulent bonds by himself and one Bokole Masha, a director of the company.

Mr Mweni was also banned from serving as an employee or director of any listed or licensed company in the capital markets for a period of 15 years.

Earlier, the CMA had also barred him from holding the chief executive’s position at Tsavo Securities for engaging in the illegal sale of government securities.

Fraudulent creation

The CMA had then said that the action was meant to “uphold market integrity and enhance investor confidence”.

This prompted it to take “action against individuals and entities involved in the fraudulent creation and sale of government securities worth Sh105 million”.

Smart Company’s telephone calls to Mr Mweni to get a comment on the development went unanswered.