Cytonn sues CMA in fallout over ‘questionable’ fund
Published on: June 24, 2021 05:34 (EAT)
The Management of Cytonn Investment PLC has sued the Capital Markets Authority (CMA) over criminal proceedings triggered by the capital markets regulator. In an application to the High Court filed under a certificate of urgency, the company says the regulator is acting in bad faith and wants the courts to declare the actions illegal. The new suits relate to a CMA sanctions criminal probe on two of the firm’s funds, the Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Projects Notes LLP (CPN). The heightened probe comes on the backdrop of fresh agitation by investors who have been forced to extend a moratorium on payments from the funds or alternatively take up a debt to real estate conversion. Cytonn whose suit was filed by board members Edwin Dande (CEO), Patricia Wanjama and Elizabeth Nkukuu has listed CMA and the Directorate of Criminal Investigations (DCI) as respondents to the matter. According to the company, CMA has just but deployed a knee jack reaction by aggravating ‘issues’ which were nearing resolve. “For over seven years now, the 1st respondent (CMA) has been engaging the 1st interested party (Cytonn Investment) on the workings and regulation of, first, the second interested party (CYHS) and recently the 3rd interested party (CPN). The DCI has since proceeded to issue arbitrary and endless summons to the applicants and other employees of Cytonn Group of Companies for inquiry into issues that until recently have been on the pipeline of resolution between the parties,” Cytonn notes in court filings dated June 21. “The continued interrogations and inquiries are founded on malice, breach of trust, bad faith, illegalities and on an improper factual and legal foundation.” Cytonn maintains issues surrounding the two financial products are purely administrative in nature and largely oppose the criminal probe announced and served to the company in November last year. Last week, the CMA retaliated it was probing the entity for potential violations in running the fund after a viral video from a distressed investor in the CHYS over the extended moratorium to payouts and the subsequent proposed debt to real estate conversion offer. On the bigger picture, this is just but the latest tussle between Cytonn and the markets regulator that has also seen the affairs of other funds dragged into the tug of war. Previously, Cytonn Investment Chief Executive Officer Edwin Dande has slammed the CMA as backward in a daring onslaught at the regulator. Through his various social platforms including Twitter, Dande has continued to throw jibes at the CMA as he pushes for the ‘up-styling’ of regulations in the domestic capital markets.