David Tumaini Maena, a former CBA Capital bond trader has been charged a financial penalty of Ksh166.9 million for engaging in insider trading activities between 2016 and 2017. It is one of the highest fines ever charged to an individual in Kenya for financial crime.
According to a report by the Capital Markets Authority, “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.”
PRESS RELEASE: CMA takes enforcement action against David Tumaini Maena pic.twitter.com/9Sd4DJJmn1— Capital Markets Authority_Kenya (@CMAKenya) February 19, 2019
Gains from the illegal traders were shared between the dealers and the bond facility owners. CMA’s investigations revealed that Mr. Maena was a key member in the scheme. As a dealer of government securities, he used his position to acquire illegal gains of up to Ksh83.475 million. Mr. Maena was given an opportunity to refute the findings by CMA but failed to do so.
Penalty actions taken against him by CMA’s board include; disqualification from holding any key office in a public listed firm or any institution approved by the CMA; a financial penalty of Ksh166.95 million which is twice the amount of gains he made from the illegal transactions; and possible disciplinary action from the Institute of Certified Investment and Financial Analysts.In 2012, Mr.
Fred Mweni, a bond trader with Tsavo Securities was banned from running any CMA licensed institution for engaging in fraudulent bond trades. The company he worked for, Tsavo Securities was charged a penalty of Ksh39.5 million.