The Capital Markets (Whistleblower) Regulations

Section 1. Citation. Section These Regulations may be cited as the Capital Markets (Whistleblower) Regulations.

Section 2. Interpretation. Section In these Regulations, unless the context otherwise requires— "Act" means the Capital Markets Act; "Authority" has the meaning assigned to it under the Act; "Compensation Fund" has the meaning assigned to it under the Act; "new and timely information" means information that is not already known to the Authority from any other source and which the whistle-blower obtained from their independent knowledge, experience, communication or observation during in employment, business or social interactions, "securities" has the meaning assigned to it under the Act; and "whistleblower" means any person who provides to the Authority, either by himself or acting jointly with another person, new and timely information relating to misconduct or contravention of laws relating to securities leading to the recovery of penalties or illicit gains referred to in section 18(2A) of the Act.

Section 3. Eligibility Section A whistleblower shall be eligible for a reward under these Regulations where the whistleblower voluntarily provides information or evidence, to the Authority, that leads to the successful recovery of penalties or illicit gains within the capital markets.

Section 4. Conditions for reward of whistleblower Section 4(1) A whistleblower shall only be rewarded in accordance with these Regulations. Section 4(2) A reward shall be payable to a whistleblower upon receipt, by the Authority, of the recovered sums of money. Section 4(3) Any sums of money recovered under these Regulations shall be transferred into the Investor Compensation Fund net of the whistleblower reward.

Section 5. Reportable misconduct Section 5(1) A whistleblower may confidentially report to the Authority any reportable misconduct, either anonymously or in person, through any of the Authority’s communication channels. Section 5(2)(a) failure to comply with legal and regulatory obligations as required under the Act and Regulations; Section 5(2)(b) offences under the Act and Regulations thereunder; Section 5(2)(c) capital markets fraud. Section 5(3) A whistleblower shall report a misconduct or offence in good faith and must have reasonable grounds for believing the alleged reported misconduct has occurred or will occur.

Section 6. Information to be included in disclosure Section 6(1) A report made under regulation 5 shall provide substantial details of the alleged misconduct or offence and include any relevant evidence that may assist the Authority in investigating the misconduct or offence. Section 6(2) The information reported under paragraph (1) shall be new and timely information, authentic, complete and relevant in that it makes a fact more probable than it would without it.

Section 7. Affirmation by the whistleblower Section A whistleblower shall certify to the best of their knowledge that the information provided is true and acknowledge awareness that it is an offence to submit false information.

Section 8. Action after reporting Section 8(1) The Authority may undertake an investigation or an inquiry into the alleged misconduct or offence in accordance with the Act. Section 8(2) Upon conclusion of the investigation or inquiry under paragraph (1), the Authority may impose any sanctions, penalties or other appropriate administrative measures in accordance with the Act.

Section 9. Confidentiality Section 9(1) The Authority shall take reasonable steps to maintain the confidentiality of the whistleblower’s identity. Section 9(2)(a) the Office of the Director of Public Prosecutions; or Section 9(2)(b) an appropriate regulatory authority. Section 9(3) The information provided to the entities specified under paragraph (2) shall be maintained as confidential information in accordance with the requirements set out under this regulation.

Section 10. Protection of a whistleblower Section 10(1) A whistleblower’s identity and such other confidential information of the whistleblower shall not be disclosed unless required by law or an order of the court and in accordance with the Witness Protection Act (Cap. 79). Section 10(2) A confidentiality agreement in the whistleblower’s employment contract shall not prevent the employee from reporting to the Authority any sensitive information obtained in the course of their employment. Section 10(3) The Witness Protection Act shall apply to the protection of a whistleblower who qualifies for such protection as provided under Witness Protection Act (Cap. 79).

Section 11. Application for a reward Section in the form set out in the Schedule;

Section 12. Amount of reward Section 12(1) Pursuant to section 18(2A) of the Act, the reward payable to a whistleblower under these Regulations shall be three percent of the amount recovered subject to a maximum of five million shillings. Section 12(2) A reward payable under these Regulations shall be subject to tax deductions as may be applicable. Section 12(3) A reward shall be payable to a whistleblower where the information provided is new and timely, and leads to the recovery of the sums lost.

Section 13. Denial of reward Section an appropriate regulatory agency;

Section 14. Disclosure of identity Section Prior to the payment of a reward, a whistleblower shall disclose his identity and provide such other information as the Authority may require: Provided that despite this disclosure, the Authority shall maintain the confidentiality of the whistleblower and not release any information that may lead to the discovery of the whistleblower’s identity.

Section 15. Appeals Section 15(1) Any determination made under these Regulations on the compensation of a whistleblower, shall be at the discretion of the Authority. Section 15(2) Any person aggrieved by the decision of the Authority relating to a reward may within thirty days from the date of such decision, appeal, to the Capital Markets Tribunal.

Section 16. Submission of false information Section A person who submits false information to the Authority shall commit an offence and shall be liable upon conviction to the penalty provided under section 34A of the Act.