(a) Conduct of business
The stockbroker shall act with utmost faith, integrity and dignity while handling the business of his clients.
The Stockbroker shall not use any misrepresentation and /or misleading information or conduct or any inducement to obtain business from clients.
All advertisement or publication of the Stockbroker's business shall be subject to sub clause (b) above.
The Stockbroker shall treat the records, information and matters of his client's business with utmost confidentiality and shall not disclose the same to third parties except with the client's consent or when required by law, the Authority or the Exchange to divulge the same or when the same is in furtherance of a breach of any of the Laws of the Republic or of these Rules, the Constitution or the Rules and Regulations of the Exchange.
(e) Justification of disclosure
The Stockbroker should be ready to justify his action of disclosing information communicated to him by his client concerning matters within the scope of the confidential relationship.
The Stockbroker shall act with competence, diligence and proper care in conducting his client's business and shall strive to maintain the same both on his part and on the part of his agent(s).
The Stockbroker shall avoid any negligent conduct in the affairs of his clients and shall give skilful services to the clients and avoid undertaking services for clients in which he does not have adequate knowledge and competence.
The Stockbroker shall not make any statements whether orally or writing which misrepresent the services that he is capable of rendering to his client.
The Stockbroker shall use reasonable care and proper judgement in all relationships and contacts with a client to achieve and maintain independence and objectivity.
(j) Fiduciary Duties
In all relationships with clients the Stockbroker shall use reasonable care in determining an undertaking of fiduciary duties and shall perform the same to his clients owed.
(k) Investment recommendations
The Stockbroker shall exercise utmost diligence in making investment recommendations to his clients or in taking any investment action for them.
(l) Basis for investment recommendations
The stockbroker shall have a reasonable and adequate basis for the recommendations and actions under clause 4 sub-clause (K).
(m) Suitability of Investment Recommendations
The Stockbroker shall consider the appropriateness and suitability of any investment recommendation for his client and shall take into account the needs and circumstances of the client and the basic characteristics of the investment involved and in so doing shall be required to use reasonable judgment to determine the applicable relevant factors.
(n) Disclosure on Investment Recommendations
The stockbroker shall disclose to his client the basic formal and general principles of the investment process by which securities are selected and portfolios are constructed and shall promptly disclose to the client any changes that may significantly affect those processes.
(o) Misrepresentations on expected Performance of Investments
The Stockbroker shall not make any statements whether In writing or orally which misrepresent the expected performance of any investment.
(p) Guarantees on Investments
The Stockbroker shall not orally or in writing explicitly or implicitly make any guarantees of any investment or its return except in communication of accurate information as to the terms of the investment instrument and the client's obligations thereunder.
(q) Past performance
The Stockbroker shall not make any statements orally or in writing which misrepresent his past performance in investments or what he can reasonably be expected to accomplish in investments
(r) Performance Information
The Stockbroker shall only communicate to his client whether directly or indirectly, such performance information as is reasonably fair, accurate and complete.
(s) Legend on Performance Information
The Stockbroker while presenting his performance information may use the following legend on the performance information presentation, but only if he has made every effort to ensure that such presentation is in compliance with the performance presentation standards
In all material particulars:
"This report has been prepared in compliance with the Performance Presentation standards of the Kenya Association of Stockbrokers and Investment Banks "
The Stockbroker shall openly and fairly deal with his client when disseminating investment recommendations or material changes in any prior investment advice or information given to the client by the Stockbroker or when taking investment action for the client.
(u) Conflict of Interests
The Stockbroker shall conduct himself in such a manner that transactions for his clients have priority over transactions or securities or other investments of which he is the beneficial owner and so that the transactions, securities or other investments in
which he has such beneficial ownership do not operate diversely to the clients' interests. If he decides to make a recommendation about the purchase or sale of any security or other investment at which he is a beneficial owner he shall give his clients adequate opportunity to act on this recommendation before acting on his own behalf.
(v) Beneficial Owner
For purposes of these Rules the Stockbroker is a "beneficial owner" if he directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares a direct or indirect pecuniary interest in the securities or the investment.
(w) Disclosure of Conflicts of Interests
The stockbroker when making investment recommendations to or taking investment actions for his client shall disclose to the client any material conflict or interest relating to him and any material beneficial ownership of the securities or other investments involved that could reasonably be expected to impair his ability to render unbiased and objective advice to the client.
(x) Compliance with the Law on Disclosure
The Stockbroker shall further to the foregoing comply with all requirements as to disclosure of conflicts of interest imposed by any Law and by the Rules and Regulations of the Exchange or of any other organizations governing his activities and shall comply with any prohibitions set out thereunder on his activities if there exists a conflict between his interests and those of his client.
The Stockbroker shall at all times charge his clients and cede to his agents, the Exchange and the Authority the commissions prescribed by the Exchange and the Authority and shall inform his client of any of compensation or other benefit arrangements in connection with his services to the client which are in addition to the commission or compensation from the clients for the services to the client by the Stockbroker.
(z) Consideration for recommendation
The Stockbroker shall make an appropriate disclosure to a prospective client of any consideration paid or to be paid or other benefit delivered or to be delivered to others for recommending his services to that prospective client.
(aa) Availing Information to Clients
The Stockbrokers shall avail to any client who requests at the client's costs, the last audited balance sheet for his firm, the fixed scale of charges and the names, of the directors or principals of the business.
(bb) Clients' Complaints.
The Stockbroker shall have in operation a proper and expeditious procedure and mechanism for resolving the complaints of clients that relate to the business of the client.