CMA urges chipper cash to comply with its regulations

Ham Serunjogi, Co-Founder & CEO, Chipper Cash.

Petition filed by Samuel Obedgiu has raised concern over Chipper Cash operations in the market, tasking officials at the Capital Markets Authority (CMA) to explain how the firm is encouraging Ugandans to invest in global stocks without issuing a prospectus as required by the CMA Act.

In November last year, Chipper Cash, one of Africa’s fastest fintech startups launched operations in Uganda, availing investors the opportunity to invest as little as $1 in over 1,000 companies listed on the US stock market.

Chipper Cash partnered with DriveWealth LLC, a pioneer in fractional investing and embedded finance to launch the new product. The buying and selling of shares is integrated on the mobile money platform.

CMA chief executive Keith Kalyegira told Daily Monitor that they were engaging the petitioner over the finer details of the issues raised in the petition. 

“There were some merits in the petition, and the concern is the prospectus. We required Chipper Cash to comply with our advertisement regulations, since they never used the prospectus but were inviting the public to take up shares,” Kalyegira is quoted as saying. 

He noted that his team had tried to address issues raised through a face-to-face interaction with the petitioner but Obedgiu had instead asked for a Zoom meeting since he was out of the country.

Chipper Cash holds a stock brokerage license issued by the CMA. Online brokerage platforms such as Chipper and many others have demystified the investment process by promoting fractional investing.

One of the functions of CMA is to approve prospectuses and offer documents under which securities are offered to the public. 

A prospectus is a notice, circular, advertisement or other invitation offering to the public securities for subscription including an offer of shares/securities. 

An advertisement regulation under the CMA Act Cap 84 requires a firm that has not used the prospectus to; give the number and description of securities concerned, the name and data of the issue, the amount of its issue capital, concise nature of main business of the issuer, names and addresses of issuer among others. 

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