A rogue bond trader, Rodrick Muhoro is finally paying for his millions crime after pocketing sh 104 million from irregular transactions. This is as he is facing jail and seizure of his assets by the state after the regulator found him guilty of dirty dark underground deals.
The Nairobi businessman has also been slapped with a Ksh 204 million fine and subsequently banned from trading any bonds or shares for a period of 10 years.
This is after the Capital Markets Authority (CMA), which is the regulatory body of the stock exchange, found him guilty of engaging in market manipulation from 2016-2017.
Mr. Muroni was accused of using privileged information to trade bonds which he used to make dual trades at the expense of other business people.
The irregular trades, known as front-running, arise when a crooked dealer or trader uses knowledge of customers’ orders to buy and sell to trade in their own accounts ahead of the market.
It happens when rogue dealers insert themselves or another party in a deal, to buy bonds from an investor who is selling at a lower price.
Such a trader then goes on to sell the same bonds to another person at a higher price and pockets the gain, often within a day (dual trading).
Brokers who were ordered to buy shares would then purchase them from Muroni at exorbitantly high prices. All this would happen without the knowledge of the ordinary Kenyan who would incur the expense of overvalued share prices.
This practice is called insider trading and went on for a year. The proceeds from these transactions were shared between Mr. Muroni and fixed income dealers at brokerage firms.
The market watchdog said the Mr. Muhoro colluded with fixed income dealers at un-named brokerage firms through creation of artificial arbitrage opportunities, thereby realising a capital gain of Sh 104 million.