[2008-09-05]  Nyaga Stockbrokers: Investors to wait for long
The joint statutory managers for the collapsed Nyaga Stockbrokers have applied to the Capital Markets Authority (CMA) for an extension of their management period that expires today.

Although the timeframe for the extension is unclear, the latest move implies investors who had lodged claims with the brokerage firm will have to wait longer than expected for their dues to be settled.

CMA said the managers appointed to assess the financial position of the troubled broker on March 5 had fallen behind schedule.

"They have applied for an extension because the verification process is not complete," Ms Stella Kilonzo, the authority’s chief executive officer told The Standard on Thursday.

amount of claims

The Nairobi Stock Exchange (NSE), one of the co-statutory managers, however, declined to disclose the amount of claims but said they needed more time to finish the task.

"We cannot disclose that information now but we are seeking an extension," Mr Chris Mwebesa, the bourse’s chief executive officer said.

Sources however say investors’ claims against the institution had climbed to nearly one billion shillings by July, putting the statutory managers in a financial dilemma.

The claims were lodged with CMA and NSE by an estimated 70,000 investors. The enormity of the financial hole left by Nyaga became even more apparent as the period for receiving claims from investors and creditors closed in June. However, attention is likely to be focused on how CMA and NSE will raise the massive amount needed to settle the claims.

For a market that boasts of holding more than 1.5 million accounts, a drop in investor confidence could erode the credibility of CMA as the regulator and NSE as a self-regulating body for stockbrokers.

Source: © 2008 The Standard