The High Court has stopped the Capital Markets Authority (CMA) from launching an alleged ‘criminal probe’ on Cytonn Investments Management.
Two weeks ag, Cytonn accused the Capital Markets Authority (CMA) of malice over its statement on Cytonn High Yield Solutions (CHYS). In its statement, CMA said that the CHYS is being investigated “for criminal violations” because it is unregulated. This was after videos emerged online that Cytonn had failed to honor its part of the deal in the CHYS scheme, a thing which the firm termed as ‘factually incorrect and misleading’.
The investments firm welcomed the ruling with a press release.
“This reprieve follows a hurriedly launched “criminal probe” by the Capital Markets Authority as an attempt on their part to disown their engagement over a long period of time with Cytonn Investments on one of the two funds facing liquidity challenges like all real estate funds in light of Covid-19. CMA was partisan to creating, naming and approving CHYS as a private offer since 2016. Supporting documents can be found below:
Cytonn has been winning in Court
10 months ago, the High Court has issued stay orders against the Capital Markets Authority (CMA) over its attempt to limit Cytonn High Yield Fund (CHYF) to 10 percent investments into Cytonn managed projects.
In the above, CMA wanted CHYF to reduce its investments into Cytonn managed projects to a maximum of 10 percent of CHYF, allegedly as per regulation 16 (2) of the Collective Investments Schemes regulations.
Eight months ago, the court found that CMA had incorrectly sanctioned Cytonn over the Cytonn Money Market Fund (CMMF).
In a ruling delivered by Lady Justice Grace Nzioka, the court found that CMA cannot bar money market funds from boarding new clients or unit orders, since there is no such provision in the Capital Markets Act.
“In exercising this power, the Respondent directed the 1st Interested party (Cytonn Money Market Fund) not on board new clients or unit holders. It is argued that, that particular sanction is not provided for under section ii (3) of the Act (Capital Markets Act). That is correct. In my considered opinion, the 2nd Interested party (Cytonn Unit Trust Fund) cannot operate without a Trustee. However, in regulating them the Respondent should cite clearly, the relevant provisions of the law,” ruled Justice Nzioka.
Cytonn Investments CEO Edwin Dande moved to court in December 2019 seeking to have CMA sanctions suspended.
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