National Bank of Kenya Punished for Flouting the Rules

Weeks after National Bank of Kenya flouted the rules of finance by announcing a profit warning which preceded a loss of 1.2 billion shillings too late, the Capital Market Authority has said that it has imposed a fine on the lender. The fine is an unknown amount of money and there are speculations that this might be just another way of trying to cool the waters on the surface of the CMA to appear as though it working.

The National Bank of Kenya came under fire after it announced its loss out of the blues and without the knowledge of the public as well as shareholders as stipulated in the law. The law requires all listed firms, upon realizing that their profits will fall for more than 25 percent has to inform the public and shareholders via a national media 24 hours before the actual release of the financial results something National Bank of Kenya failed to adhere to.

The Capital Market Authority came under intense criticism for sleeping on its job and for failing to make sure all firms follow the laws and rules governing them as stipulated. Earlier, CMA had said that National Bank of Kenya followed all the requirements as stipulated in the law but made a U turn yesterday in saying that the rules were not followed.

According to a statement from CMA, “Following further discussions with the board and management of National Bank to assess the circumstances that led to the failure to publish a profit warning in a timely manner, the authority proceeded to impose an appropriate financial penalty for the lapse.”

CMA is mandated by law to make sure that all firms work within the limits of the law so as not to mislead the public or investors in such firms. In the past few years, CMA has appeared to be going against its own set rules especially after it appeared that two firms; Kenya Airways and Uchumi Supermarkets were operating with a negative capital but still allowed to trade their shares at the Nairobi Security Exchange.

Article by Juma Fred.