Kenya’s Capital Markets Authority (CMA) has imposed a 10 million shilling (around 76,900 US dollars) fine on global professional services firm Ernst & Young LLP (EY) over its role as reporting accountant in Uchumi Supermarkets Limited’s (USL) 2014 rights issue.

The action follows a regulatory review spanning more than a decade, which found serious misrepresentations in USL’s financial statements and information memorandum used during the fundraising exercise. The CMA said these discrepancies misled investors and breached disclosure requirements.

EY, which audited USL and acted as reporting accountant, has also been ordered to implement remedial training for staff involved in auditing listed companies and other CMA licensees. The programme, to run for three years under supervision from another EY member firm, requires submission of regular progress reports to CMA and the Institute of Certified Public Accountants of Kenya (ICPAK). Failure to comply could result in EY being barred from providing professional services to listed companies and regulated entities.

The CMA further recommended disciplinary action against EY and the engagement audit partners responsible during 2010–2014, Michael Kimoni and Joseph Cheborbor, over failures to ensure accurate disclosure in USL’s 2014 annual report.

Regulatory proceedings began in 2015 following an inquiry into USL, which identified multiple violations during the rights issue. EY challenged the enforcement in court in 2016. The High Court upheld CMA’s mandate in 2017, and a subsequent appeal was dismissed in 2022, allowing the regulator to complete its enforcement action.

“This determination underscores CMA’s commitment to investor protection and market integrity,” the authority said. Previous enforcement actions have been taken against former USL board members and senior management.