CMA turns heat on HFCB over results disclosure breach

The Capital Markets Authority (CMA) has opened a potentially consequential investigation into HFCB Group after the lender released its half-year financial results while trading was under way, triggering a trading halt and exposing weaknesses in the handling of price-sensitive information in Kenya’s capital markets.

The regulator is now examining whether HFCB breached mandatory disclosure rules by allowing investors to access material financial information before the Nairobi Securities Exchange had formally circulated the results to the market.

CMA confirmed it is investigating the matter jointly with the NSE and warned that enforcement action could follow.

“The Capital Markets Authority is reviewing the matter together with the NSE and will take action as appropriate,” the regulator said.

The controversy erupted on August 27 after HFCB published its financial results in national newspapers in the morning, while the NSE circulated the company’s financial performance statement to investors only after 11am—hours into the trading session.

The NSE responded by halting trading in HFCB shares for the remainder of the session shortly after 12.30pm, with CMA approval.

The exchange cited Regulation 89(4) of the Capital Markets (Public Offers, Listings and Disclosures) Regulations, 2023, which requires material information to be disclosed simultaneously to CMA, the exchange and the public during non-trading hours.

The breach is significant because financial results can materially influence a company’s share price. Releasing such information while the market is active can create an uneven playing field, potentially giving investors who receive or process the information earlier an advantage over others.

The rules are designed to prevent precisely that scenario by giving the entire market an opportunity to digest price-sensitive information before trading begins.

“The rationale against release of material information during non-trading hours is to ensure that investors can consume the information, for purposes of price discovery, and take it into account before the market opens,” CMA said.

The episode also exposed a technical complication in HFCB trading. Under normal conditions, NSE shares are subject to a 10 per cent daily price movement limit from the previous closing price.

That ceiling and floor are lifted during sessions in which material corporate announcements are properly made, allowing unrestricted price discovery.

Because HFCB’s results were released without the required disclosure to the exchange, the normal price limits remained in force even as investors gained access to potentially market-moving information. The NSE therefore halted trading rather than allow an orderly market to be compromised.

The irony is that the information at the centre of the dispute was overwhelmingly positive.

HFCB reported a 74 per cent jump in profit before tax to Sh1.22 billion for the six months ended June 2026, from Sh703 million a year earlier. Net profit rose 60 per cent to Sh998.3 million, while operating income climbed 32 per cent to Sh3.8 billion.

HFCB Chief Executive Officer (CEO) Robert Kibaara attributed the performance to “disciplined execution” of the group’s strategy, citing growth in both funded and non-funded income.

But the stronger earnings have now been overshadowed by a more fundamental question on whether  all HFCB investors given an equal and timely opportunity to act on the information.

The CMA investigation will determine whether the disclosure lapse warrants sanctions and could reinforce a wider regulatory message to listed companies—that strong financial performance does not excuse failures in market disclosure.