The Capital Markets Authority (CMA) has launched the last phase of compensation for investors who lost money following the collapse of Discount Securities Limited (DSL).
The stockbroker went bust in 2009 following fraudulent transactions involving firm employees, forcing CMA to step in and help reimburse the investors. The first phase was launched in February 2012 where investors received their payouts, with CMA asking for more time to foot the remaining dues.
The last tranche which will take three months will commence from April 1 this year and is done through the Investor Compensation Fund (ICF), a body formed to compensating investors who suffer pecuniary loss resulting from the failure of a licensed stockbroker or dealer to meet their contractual obligations. The exercise will also address the transfer of shares to other Central Depository Agents (CDAs) for investors who still have their shares under the custody of DSL.
“CMA procured the services of Co-operative Bank of Kenya in February 2012 to process and disburse funds to investors. We also transferred all details of share accounts to them to enable investors initiate the transfer process at any bank branch nearest to them,” said CMA Acting CEO Mr Paul Muthaura.
Investors who will not have submitted their claims by June 30 this year will forfeit their claims. The Authority had also stressed that those who would not have transferred their shares by the same period will have their securities deemed as unclaimed and these may be transferred to the Unclaimed Financial Assets Authority (UFAA). So far over 10,000 investors are yet to lodge their claims for compensation.
“We launched the first phase of compensation to investors in February 2012 and since then, 4,324 investors have been compensated. We have paid out a total of Kshs84 million, which translates to 26% of the total creditors of DSL,” added Muthaura.
The compensation vehicle, Investor Compensation Fund, gets revenues from a share of 0.01% commission for every trade executed at the Nairobi Securities Exchange (NSE). An investor can receive up to a maximum compensation amount of Kshs50,000 as provided for under the law.
In order to receive compensation, genuine claimants are expected to visit Co-operative Bank with identification documents, Central Depository Account Statements, and evidence of claims against DSL.
