Finally, a code of ethics for brokers


Published on 20/06/2009

By Jackson Okoth

Investment banks and stockbrokers will now be bound by a code of ethics as a way of restoring public confidence at the Nairobi Stock Exchange (NSE).

These new rules for members of the Kenya Association of Stockbrokers and Investment Banks (Kasib) are expected to rein in errant members and safeguard investors’ wealth.

“This sector has experienced some serious governance challenges over the years, which has been reflected in failure to meet prudential requirements and misuse of clients’ money,” said Deputy Premier and Finance Minister Uhuru Kenyatta.

He made these remarks yesterday in a message read on his behalf by Finance secretary Mutua Kilaka during a seminar on corporate governance organised by Kasib. The one-day workshop drew participants from executives and senior management in the stockbrokerage and investment banking fraternity.

“The code of ethics will assist us with the guiding principles of managing our institutions,” said Mr Micheal Gichohi, acting chairman of Kasib.

This code is intended to guide all investment service providers at the NSE in ensuring professional conduct, high ethical standards and fair play.

Fraudulent dealings

For instance, the new rules prohibit any Kasib member from carrying out any transaction in relation to clients’ securities unless written instructions from the client authorising the transaction has been obtained.

Cases of clients’ losing their shares through dealings by some unscrupulous dealers had been rampant in the past leading to loss of investor confidence.

To stem fraudulent transactions in the capital markets, regulator Capital Markets Authority (CMA) recently formed an anti-fraud unit composed of sleuths from the Central Bank of Kenya.

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