Edwin Dande is on the warpath with the Capital Markets Authority (CMA) and its Chief Executive Wycliffe Shamiah, the latest chapter in a long list of high-powered corporate and legal tussles the Cytonn Investments Management boss has engaged in.
Dande might be a lot of things, but never one to back down from a fight. He hasn’t shied away from taking on former employers, old money billionaires, regulators, media outlets or anyone else he believes is working against Cytonn’s interests.
To his credit, Dande has spearheaded Cytonn’s growth into one of Kenya’s biggest investment firms in the span of seven short years. The firm has become a major player in real estate, private equity, asset management and advisory services – supported by an aggressive, sleek and sustained marketing and PR campaign over the years.
Dande’s battle with Shamiah spilled over from the boardrooms and courts to social media in the past week as the Cytonn CEO delved into his fight with CMA and why he believes the regulator as currently constituted is a hindrance to the growth of financial services sector. He has taken it upon himself to ensure Shamiah is kicked out of office, forming a consortium to push for his removal and recruiting an expensive legal team for a fight he promises to pursue to the end.
“I will be putting together a forum to push for change, If it fails, it fails, but I will give it my all. CMA is too important an organization to be left in the hands of such a lawless bunch,” he wrote.
Dande believes recent CMA actions on Cytonn are a bid by Shamiah to save himself after the regulator came under heavy criticism including from Parliament. Looking into complaints of a section of Cytonn investors, MPs led by Aden Duale slammed Shamiah and CMA for seemingly sleeping on the job in its watchdog role – highlighting instances where Kenyans lost money to collapsed financial institutions including Imperial Bank and Chase Bank and the role CMA played, or failed to, in the debacles which impacted countless livelihoods.
CMA in August directed Cytonn Asset Managers Limited, a licensed fund manager, to immediately stop signing up new clients until it changes the name of its business and its regulated products, in a move meant to “enhance investor protection and promote investor confidence in the integrity of capital markets”.
The move came after the authority opened investigations into two unregulated Cytonn funds which have investments worth Ksh13.5 billion – Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN). The two funds failed to pay investors upon maturity of their investments in Cytonn properties, and the firm has since 2020 been facing legal suits from disgruntled investors after Cytonn asked them to postpone payment of their investments citing liquidity challenges due to the pandemic. Cytonn invoked a force majeure clause extending the maturity date of the two funds.
CMA also issued an advisory urging investors to stick to regulated products: “Investors to only invest through licensed and approved entities who offer and promote regulated products, to enable them to get the protection offered by the authority,” the notice read in part.
Cytonn responded with a hard-hitting Cease and Desist threatening to institute defamation proceedings against Shamiah and to push for his expeditious removal from office, stating: “Following your incessant attack on the Cytonn brand, you are putting to risk investments of over 30,000 Kenyans valued at over Ksh20 billion and we now seek to protect the interests of innocent investors.”
Dande took it a notch further as he went all-out attack mode against Shamiah and CMA, describing the regulator as a lawless and discriminatory organization. The last straw for Dande was a 24-hour notice Cytonn was given for a meeting with CMA a day before they were hit with the order to change their name.
According to the Cytonn Chief Executive, he and other shareholders and board members were unavailable at such short notice and asked the regulator to reschedule as they were unable to raise quorum, but CMA informed them that they had missed the meeting and ordered the name change. Interestingly, Dande dragged CMA’s engagement with his former employers Britam as evidence of CMA’s double standards.
Dande’s controversial exit from Britam and his legal battles with the financial services firm are well documented. He alongside other senior managers Elizabeth Nkukuu, Patricia Wanjama and Shiv Arora noisily left the company to start rival firm Cytonn, and in 2016, denied charges of theft of Ksh1.1 billion stemming from alleged irregular transfers from Britam-affiliated accounts to rival companies.
Reiterating his position that the CMA is discriminatory, he cited an interview in which Shamiah was questioned about Britam shareholder Peter Munga’s controversial purchase of Britam shares from the Mauritius government, a transaction probed by a Commission of Inquiry in the island nation.
Shamiah had stated: “We have scheduled a meeting with Britam next week to understand if there are regulatory matters. What we know is that the Govt in Mauritius feels its officers were comprised when clearing the transaction our investor [Peter Munga] indicates that it was based on negotiations.”
Dande considers the situation a case of double standards, stating: “The quote clearly betrays the mind of this regulator… he is running two books of market players, those presumed innocent and liked, such as his beloved “our investor”, and those presumed guilty and disliked,” he stated, while asserting that his focus was on Shamiah and “not Munga or any of his shenanigans”.
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CMA, however, also remains under fire from different angles. Duale had questioned the efficiency of CMA in regulating capital markets and estimated the losses incurred by investors due to their negligence at Ksh36.8 billon.
The MP noted how in 2005, Imperial Bank Ltd allotted Ksh2 billion to bondholders despite there being financial fraud within the bank as CMA looked on.
“The bank eventually collapsed together with investors’ funds under the watch of the CMA.”
He further noted how Chase Bank was approved by CMA to issue Ksh4.8 billion bonds before the bank was placed under receivership – terming it a case of poor regulatory oversight.