Trader in the dock for unlicensed forex brokerage

A Nairobi businessman was yesterday charged with operating an online forex business without the necessary licences.

Manases Karanja, director of Interweb Global Fortune had been trading in currencies online and offered high returns for clients, according to investigations by the Capital Markets Authority (CMA), in what appeared like a pyramid scheme and may have defrauded clients of millions of shillings.

Mr Karanja, who appeared before Milimani Magistrate Kenneth Cheruiyot, pleaded not guilty to the charge.

"Karanja… being the director of Interweb Global Fortune knowingly carried out business as an online forex broker without a valid licence issued by CMA or the Central Bank of Kenya,” read the charge sheet.

CMA issued a public notice Thursday, cautioning Kenyans from participating in online forex trading through Interweb, or with Karanja.

On May 26 this year, the Sunday Standard carried an investigative story on how Kenyans were risking their money with unlicensed online forex traders, particularly Interweb Global which provided clients with scant details on its operations.

According to CMA, investigations on Karanja’s firm revealed the firm had been operating as an online forex trader without requisite regulatory approval, adding that the business appeared to be a ponzi scheme.

"(The firm) has been purporting to carry on business as an online forex trading broker and money manager without a valid licence from the CMA in line with Section 23(1) of the Capital Markets Act,” CMA Chief Executive Paul Muthaura said in a statement.

"In addition to unlawfully collecting funds from investors, Interweb Global Fortune’s business model features traits of a pyramid or ponzi scheme, where investors are promised high returns which are not realistically available through credible investment products.”