The Capital Markets Authority (CMA) has directed Cytonn Asset Managers, to stop signing-up new clients until it changes the names of its business and its regulated products, with immediate effect. The move seeks to enhance investor protection and promote investor confidence in the integrity of capital markets.
Commenting on the new directive, CMA CEO Wyckliffe Shamiah stated, “The directive is founded on the provisions of the Capital Markets Act section 11(1)(d) read together with section 11 (3)(cc) (ii), and 11 (3)(w). The change of the name of the licensed fund manager and the regulated products it offers to the public will effectively eliminate any confusion caused by the similar name used by the unlicensed entity Cytonn Investments Management Limited. This will enable the public to clearly distinguish between the entity and products that we regulate from the unlicensed entity offering unregulated products and thus facilitate better decision-making.”
The directive to stop onboarding clients will be in effect for a period of 3 months or until the fund manager fully complies with the directive to change the business name and its regulated products.
In April, 13 investors filed complaints with CMA against Cytonn for allegedly failing to pay Ksh. 122.8 million upon maturity of funds in one of its pools. The investors claimed that Cytonn had delayed payments of between Ksh. 500,000 and Ksh. 25 million, prompting the regulator to petition the courts to bar Cytonn from putting more money in real estate projects.
Last year, the wrangle between the firm and the regulator spilled to court, with the latter obtaining a stay order on September 21.