The High Court has issued a gag order against the Capital Markets Authority (CMA) and its CEO Wycliffe Shamiah barring them from making further defamatory statements against Cytonn Investments.
In a ruling, Justice J Chepkwony threw out CMA’s application that was seeking to dismiss the suit filed by Cytonn over utterances by Shamiah, who claimed that Cytonn CEO Edwin Dande was facing professional disciplinary cases. Shamiah also claimed that Cytonn was unregulated and unlicensed.
CMA was put to task to prove that their utterances were responsible, truthful and trustworthy. However, the court found that their utterances were contrary to CMA’s admission in court that the company was duly licensed and registered. The court thus directed that Cytonn had satisfied the requirements for issuance of a temporary injunction.
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Cytonn had also applied to have the two defendants delete any defamatory statements or posts that were issued to the public, as well as issue an apology.
On deletion of the posts, retraction of the statements, and issuance of a public apology, the court directed that it would be determined at the end of the main suit.
In the suit, Dande accused Shamiah of “loitering the halls of parliament, TV stations, and social media”, telling half-truths and fabrications about two Cytonn products, the Cytonn High Yield Solution (CHYS) and Cytonn Private Notes (CPN).
“The purpose of the lawsuit is to stop Mr Shamiah from loitering the halls of parliament, TV stations, and social media telling half-truths and outright fabrications, and in the process hurting the very investors he is handsomely paid by taxpayers to protect. We need a quiet and enabling environment to restructure CHYS for the benefit of all investors. If he cannot support the process, he should just stay away from it and not undermine it with fabrications,” Dande posted on Facebook in October 2021.
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The two solutions were placed under court-appointed administration last year in a bid to turn around their performance after they underwent liquidity strains following the Covid-19 pandemic, a situation the company said was aggravated by negative publicity and sustained regulatory attacks.
Given the illiquidity of the funds, the board invoked the Force Majeure clause, resulting to a 15-month moratorium (from March 2020 to June 2021). During this moratorium, CHYS and CPN were estimated to be able to service 50 percent of their interest obligations.
Recently, CHYS and CPN investors voted to have the court-appointed administrator Mr Kereto Marima removed. The decision to have the administrator removed was reached during an investors’ meeting held on April 13, 2022. The investors also voted to have the process of tracing financial flows started and enforcement of corporate guarantee.
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