Stock broker comes under the spotlight for business dealings

Tuesday, December 21st, 2021 00:00 | By
Paul Matibo says he had invested a total of Sh27 million in shares and cash at Dyer and Blair by March 2015.

Dyer and Blair Investment Bank has come under the spotlight following accusations of wash-sale share trading scheme. 

This is a practice where investor shares are sold without their permission at a lower price after which they are bought back at a higher price.

An investor has petitioned Parliament to intervene, accusing the stock broker of selling his shares without his permission in fraud that cost him Sh19 million.

By March 2015, the investor Paul Matibo had invested a total of Sh27 million in shares and cash at Dyer and Blair having transferred his shares from ABC Capital and Kingdom Securities.

“That, in spite of him not having instructed the bank to make any transactions on his behalf, Ngei was shocked to learn that between May and August 2015, the broker had committed his shares in a wash-sale scheme where profitable shares had been sold for low value and re-purchased at a higher value,” the petition reads.

Same company

The petition, adds that without Ngei’s authority, Dyer and Blair Investment Bank sold 22,700 shares in Kenol/Kobil Ltd. at Sh8.80 each on May 28, 2021 and repurchased 8,300 shares in the same company at Sh8.90 per share on May 29, 2015 then further sold 80,500 shares in the company on the same date at Sh8.60 per share.

On August 3, 2015, Dyer and Blair Investment Bank, again without express instruction or authority from Ngei, sold 200,000 shares in Equity Bank Ltd. for Sh37.75 each.

The broker then on August 6, 2015, repurchased 100,000 shares in Equity Bank Ltd. for Sh40 each and purchased a further 70,300 shares in the said bank for Sh42 each on August 13, 2015. 

“By engaging in the foregoing reckless, fraudulent, irregular and unregulated trading activities, Dyer and Blair Investment Bank exposed Ngei ---a colossal loss of Sh19.4 million,”; said the petition to Parliament after Capital Markets Authority reportedly failed to take action.

Ngei says that he enquired from the broker about the unexpected depreciation of his shares at the end of 2015, the bank falsely associated it with devaluation of shares.

However contrary to the claim by the bank, Ngei established from the CDSC that Dyer and Blair Investment Bank had fraudulently traded in his shares without his knowledge.

Ngei lodged a complaint with the CMA, the regulator of capital markets but in spite of the subsequent follow-ups made on November 30, 2020 and in January 2021 to have his complaint addressed, the regulator is yet to act.

Therefore Ngei is a asking the National Assembly through the Departmental Committee on Finance and National Planning to take the matter with a view  to recovering his losses from the broker and also punish CMA from in action.

Fraudulently traded

“Inquire into the circumstances under which Dyer and Blair Investment Bank Ltd. fraudulently traded in Ngei Matibo’s shares without his express authority or knowledge and caused him to lose Sh19,388,817.59 with a view to ensuring that Ngei is paid his dues,” the petitioner requested through Kitui Rural Constituency MP David Mboni Mwalika.

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