The High Court has issued orders barring Director of Market Operations at Capital Markets Authority (CMA) Abubakar Hassan and Kenya Association of Stockbrokers and Investment Banks (KASIB) director Rina Hicks from making further defamatory statements against Cytonn Investments until a case filed in court is heard and determined.
Hassan and Hicks are accused of defaming the Investments company in an interview posted on Hicks’ Youtube channel dubbed Money-Wise, where they incorrectly implied that Cytonn was operating without a license.
“The defamatory statements made by 1st Defendant/Respondent (Hicks) during an interview with the 2nd Defendant/Respondent (Hassan) on the Youtube Channel are untrue, inflammatory and perpetuated by malice with an intent to injure the Plaintiff/Applicant’s (Cytonn) good standing in the eyes of right-thinking members of the public and their clients and, to damage their business, and which business is built on the premise of trust, and to scare away investors with whom the Plaintiff/Applicant closely works with,” Cytonn said in court papers filed through its lawyer Lewis Gicheha.
In one of the interviews, Hassan is quoted saying, ” “Cytonn issue is not an issue of private or public and as such an inquiry was done and it was found out that Cytonn did fund management services and that there was a mismatch between the pooled short term funds and the long term real estate investment,” implying that Cytonn was operating illegally.
In court filings, Cytonn terms the allegations as false, malicious and defamatory aimed at soiling the company’s name, which in turn would deny it business with the public.
“These statements are seen, heard and understood to insist that the plaintiff is operating without the sanctioning of the law and approval of the Capital Markets Authority a statement that is not only false, malicious but also defamatory. Contrary to the allegations, Plaintiff has faithfully complied with all the requirements that were put across by the Authority including the change of name from Cytonn Cash Management Solutions to CHYS (Cytonn High Yield Solutions) which was a recommendation by the Authority. On July 5, 2018, we took out a newspaper advert, at your request, and announced to the public that CCMS had now changed to CHYS,” the company told the court.
In May, the High Court issued similar orders against 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 H. Dande was facing professional disciplinary cases yet there is no record of any disciplinary case against Dande. 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 an injunction.
Cytonn has been at loggerheads with CMA over two of its privately-owned products, the CHYS and Cytonn Private Notes (CPN), which 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. The company asserts that the products were designed and named in consultations with CMA, but CMA distanced itself from the products as soon as they started experiencing illiquidity.
Given the illiquidity of the funds, the board invoked the Force Majeure clause and thereafter put the two funds under administration.
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