CONTINUOUS ASSESSMENT TEST-2

FOURTH YEAR EXAMINATIONS FOR THE DEGREE OF BACHELOR OF LAW

GPR-442- SECURITIES REGULATIONS LAW

DUE DATE: 1 WEEK BEFORE EXAMS

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Instructions to Candidates
1. This CAT has 12 short explanatory questions. Please do all the questions
2. This is a take away Group Work CAT (One Group should not be less or more than 6
people ).
3. All group members should have their names, registration number and signatures on the
report.
4. There is strict compliance on deadline.
5. Use Book Antiqua Font 12 and 1.5 line spacing
6. Please align (Justify your work).
7. Each question should be repeated in bold before it is answered and start every question
on a new page.
8. Have a table of content
9. Have good foot notes and reference (Use Oscola)
10. Have Bibliography
11. Use Case Law and Legal Authorities as much as practically possible
1. Trace the origins and development of a registered company and its regulation;
outlining its development. And the Evolution of Securities regulations to its
present-day status in Kenya.
2. “Any serious examination of the role and function of securities regulation must
sidestep the widespread, yet misguided, belief that securities regulation aims at
protecting the common investor. Securities regulation is not a consumer protection
law. Rather, scholarly analysis of securities regulation must proceed on the
assumption that the ultimate goal of securities regulation is to attain efficient
financial markets and thereby improve the allocation of resources in the
economy…”-Z. Goshen & G Parchomovsky, ‘The Essential Role of Securities
Regulation’ (2006) 55 Duke Law Journal 711.Discuss.
3. “Regulatory approaches to securities markets have traditionally been
characterized as Government or Government-led and Self-regulation. However, a
third categorization which is a configuration of the two variously described as
“Self-regulation with Oversight” or “Cooperative regulation” or “Government
Supervised Self-regulation” has developed. This regulatory model combines the
attributes of government and self-regulation.” –Jacob J Gakeri, ‘Regulating
Kenya’s Securities Markets: An Assessment of the Capital Markets Authority’s
Enforcement Jurisprudence’ (2012) 2(20) International Journal of Humanities and
Social Sciences 265, 266.Discuss the various regulatory approaches in securities
regulation taking care to note their benefits and drawbacks.
4. A robust and facilitative regulatory environment is critical for the maintenance of
investor confidence as well as investor protection.” In light of the foregoing:
a) Discuss the role (in economic development), purpose and principles of Securities
and Capital Markets Regulation.
b) Discuss the salient advantages and challenges of national or government
regulation in securities markets.
c) To what extent do your country’s securities laws promote self-regulation of
securities markets?
d) The Legal, Institutional and Regulatory Framework of Securities and Capital
Markets Regulation in Kenya. highlighting the salient short comings if any.
5. One of the primary purposes of Securities Law is to require corporations to
disclosure information sufficient to investors; indeed, the Securities Law explicitly
requires disclosure of a broad range of information both periodically and based on
the occurrence of certain events
a) The desirability of mandatory disclosure requirements in securities regulation
has been the subject of a longstanding debate among corporate law scholars and
economists. Discuss.
b) In light of the above statement analyze the policy justification of disclosure
philosophy and demonstrate how this philosophy is manifested in Kenya’s
securities regulations laws.
c) Assess the extent in which the Capital Markets (Securities) (Public Offers, Listing
and Disclosures) Regulations 2002, encapsulates the policy justifications you have
outlined in (b) above.
d) What are the challenges associated with disclosure in Securities Regulations, and
give suggestions on how the challenges can be addressed?
6. Answer the following short questions on Insider-Trading
a) What is insider trading?
b) Should insider trading be regulated or not; articulate both sides of the argument.
c) Using both past and present specific examples and/or cases analyze the adequacy
or otherwise of the current legal framework on the prohibition of insider trading
in Kenya.
7. Short-selling is colloquially referred as to as an attempt to ‘buy high and sell low’
and still make a profit on the part of an investor.
a) Discuss the merits of demerits of short selling within the securities market.
b) The Capital Markets Authority of Kenya recently promulgated the Capital
Markets (Securities Lending, Borrowing and Short Selling) Regulations,
2017. Discuss the extent to which these Regulations encourage or limit
trading at the Nairobi Securities Exchange.
8. “The remedies of a person induced to take shares or debentures as a result of mis-
statements of omission from the prospectus may lie against the company...or
against the persons individually responsible for the prospectus”. Sealey: Cases and
Materials in Company Law 90 [1971]
a) Analyse this observation with specific reference to the adequacy of investor
remedies against the issuer and other persons.
b) Assess the effectiveness of the remedial mechanisms relevant in Kenya.
9. Set out and discuss the salient measures that have been taken to deepen and widen
Kenya’s Securities market for the last 30 years or so.
10. What factors in your opinion account for the poor performance of Nairobi
Securities Exchange and other securities in East Africa and how this situation can
be improved.
11. Answer the following short questions on internationalization of Securities
Regulation
a) What factors in your opinion account for the rapid development of International
securities regulation over the last 25 years.
b) Discuss the principal approaches to international securities regulations.
12. Some scholars have described the enforcement jurisprudence of Kenya’s Securities
Market of the 21st Century as inappropriate since it is “pervasive, heavy handed,
and fault-finding type”.
With reference to specific decisions, orders, instructions or other steps or
enforcement actions taken by the Capital Markets Authority, its organs or other
regulatory agencies or bodies demonstrate the enforcement jurisprudence in
Kenya and comment whether this is a fair characterization of the same.