Capital Markets Authority (CMA) has fined stockbroker David Tumaini Maena a whopping Shs 166 million for illegal trading in government securities.
The Shs 166 Million is double the money ( Shs 83,475,000) Maena allegedly made from the irregular trading of government securities.
Maena of CBA Capital, subsidiary of Commercial bank of Africa, was also banned for 10 years from holding an office in a public listed company or any institution licensed by CMA.
The stringent penalties arise from accusation that the Maena, a fixed income trader at CBA Capital rode on privileged information to illegally profit from trading in government securities.
According to statement from CMA, Maena was found culpable following the conclusion of investigation into allegations of irregular trading of government securities in 2016 and 2017.
“Through the investigations, CMA established the presence of a scheme where fixed income dealers at investment banks, asset management firms and brokerage firms colluded with individual bond facility holders in bank custodial accounts to trade bonds ahead of orders placed by non suspecting investing clients ( also known as front running a client) for gain,” CMA said in the statement.
According to CMA, the gains from these dubious trades were shared between the fixed income dealers and the bond facility owners in contravention of capital market laws.
CMA stated that Maena used his position as a licensed government securities dealer to illegally gain Shs 83,475,000 by trading ahead of his clients’ accounts in bond transactions he facilitated as a broker in 2016 and 2017.
Apart from the fine and the ban, CMA has also referred the matter to the Director of Public Prosecution for possible criminal charges for market manipulation.
CMA has also asked the Asset Recovery Agency to trace all the assets bought with the proceeds of the illegal trading.
“The Institute of Certified Investment and Financial Analysts should also consider disciplinary action for professional misconduct,” said CMA.