Investment firm closure by CMA enters final stage

CMA acting chief executive Paul Muthaura. FILE 

By GEOFFREY IRUNGU

In Summary

• Capital Markets Authority (CMA) said it would publish a 45-day notice, expected in the coming days, during which investors who had pending matters with the company would be expected to make formal claims.
• Franklin Management has an active investor portfolio of  Sh344 million ($4 million) as per documents filed with the CMA last year.
• The notice is to prepare the company for the planned closure in a few months, which the regulator now describes as “voluntary withdrawal” from the market.

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The impending closure of investment advisory firm Franklin Management Consultants (FMC) is set to enter the penultimate stage once the capital markets regulator publishes a notice calling on investors to lodge any claims they may have against the company.

The Capital Markets Authority (CMA) said it would publish a 45-day notice, expected in the coming days, during which investors who had pending matters with the company would be expected to make formal claims.

READ: CMA to close financial advisory firm

Franklin Management has an active investor portfolio of  Sh344 million ($4 million) as per documents filed with the CMA last year.

“The authority shall publish in the Kenya Gazette and the daily press a 45-day notice inviting members of the public to raise any outstanding issue with yourselves within the said notice period,” said CMA’s acting CEO Paul Muthaura in a letter to FMC seen by the Business Daily.

The notice is to prepare the company for the planned closure in a few months, which the regulator now describes as “voluntary withdrawal” from the market.

It is after the expiry of the notice and resolution of any issues that might arise that the regulator will then place a final notice in the Kenya Gazette informing the public about the revocation of the licencee as an investment adviser.

“Upon resolution of the outstanding complaints (if any), the authority shall place a final notice in the Kenya Gazette informing the public of the revocation of the investment adviser licence held by Franklin Management Consultants Limited,” said Mr Muthaura.

With the 45-day notice period it means clearing the company for the voluntary licence withdrawal could take a while if any issues requiring resolution emerge, even though that the FMC chief executive Andrew Franklin has repeatedly said that he has been running the firm’s affairs above board.

Initially, Mr Franklin wanted to close down operations of the firm by the end of February, but the new CMA requirements is certain to push the date further to the months ahead.

During the 45-day period and after, CMA directed the firm not to carry out any business of investment adviser.

Mr Franklin accuses the CMA of being out to shut him up due to his outspoken nature.

READ: Investment adviser who refuses to toe CMA’s line calls it a day

He has protested that the CMA refused to allow his request to be exempted from several regulatory requirements such as the appointment of a chairman and independent directors to oversee management of the company.

He has also differed with the regulator on the need for recapitalisation, arguing that his firm was too small to require the extra cash and bureaucracy. The CMA has however stood its ground in enforcing the rules, which it says are necessary for safeguarding investors’ welfare.