An investor has moved to court to sue the multi billion investment firm Cytonn Investments for obtaining money from investors without Capital Markets approvals.
Mr Kenneth Kasinga sued the investment firm lamenting how he was allegedly duped into investing Sh3 million.
According to the Business Daily, Kasinga believed he was being made a partner in the private cash call involving less than 100 people only to discover Cytonn had raised money from 3,000 investors.
Kasinga said the company was disguised as Cytonn High Yield Fund as a private placement to avoid scrutiny yet it did not satisfy the conditions set out by the Capital Markets Authority to qualify as such.
“Cytonn misrepresented to me that the product offered was a private offer while knowing that it was a public offer, that the membership of investors was not more than 100 when it knew that it had 3,000 investors and that I would be its partner when it had no intention of doing so,” he said.
However, Cytonn defended itself saying they were compliant with the law which only required a company to invoke one of the nine conditions set out in section 21 of the Capital Markets Listings and Disclosure Regulations to qualify as a private placement.
The conditions include that a private offer should be restricted to less than 100 people, members of a club with common interests, restricted circle of people with sufficient knowledge and understanding of the risk or offered in connection with a bona fide invitation.
