Cytonn Investments Scandal: Thousands of investors are staring a loss of more than Sh. 10 billion after investing in Cytonn Investments. This comes as the scandal at Cytonn goes full blown with investors crying foul and the Capital Markets Authority announcing that Cytonn is currently under investigations.
According to a report that appeared in the Business Daily on Friday, the CMA opened investigations into Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN)—which have investments worth Sh. 13.5 billion.
In a related report that appeared in the Daily Nation, Cytonn successfully pulled off the scandal by coming up with “two products with similar names that confused the not-so-sophisticated investors. One of the investment products– Cytonn High Yield Fund (CHYF)–is regulated by the Capital Markets Authority (CMA) and the other known as the Cytonn High Yield Solutions (CHYS), which has characteristics similar to an ordinary merry go round fund, is not.”
This report says that this ensured that investors could not tell the difference between the regulated and unregulated. However, Cytonn chief executive officer Edwin Dande says that it is not his fault that investors could not tell the difference. “In an interview yesterday retorted that he is an investment manager, not a magician who can mysteriously turn real estate into cash,” the report quoted him. It added that he said the unregulated product largely invests in the real estate sector, and operates like a Chama (merry-go-round).
Yesterday, the CMA asked aggrieved investors to report their grievances to the police.
“Investors who are affected by investing in unregulated products should report to the Capital Markets Fraud Investigation Unit (CMFIU), which is the Police Unit attached to the Capital Markets Authority,” CMA chief executive officer Wyckliffe Shamiah said, adding that CMFIU is currently investigating the issue for criminal violations for investors in the Cytonn High Yield Solutions (CHYS). “The Authority confirms that Cytonn Investments is not a licensed and approved entity,” he said.