They accuse the firm of of deception for not disclosing its shaky financial position contrary to the Consumer Act 2012.
The investors say Cytonn stopped paying their monthly interest in June 2020.
Three investors have filed a case against Cytonn investment over their Sh 46.7 million investment.
Charles Nzioki Kanyaa, Harrison Kaloki Kanyaa, Robert Munyao Kanyaa want the firm to pay them over sh 46.7 million which they had invested in the firm plus interests.
The applicants accuse Cytonn representatives of knowingly making deceptive misrepresentation of returns to them, well aware of the true shaky financial position of the firm.
The three claim that on diverse dates, the representatives of Cytonn made representations to them that they would receive handsome monthly returns if they invested substantial amounts of money with the firm.
“Pursuant to those representations, on diverse dates between 29th October 2018 and 30th October 2018 the defendants invested with the firm Sh 39 million at an agreed interest rate of 18 per cent payable monthly for a period of twelve months,” they state.
They claim that the representations were unconscionable, misleading and deceptive contrary to the provisions of the Consumer Protection Act, 2012 and amounted to unfair practices.
According to the three, upon maturation of the investment of Sh 30 million they had invested on 4th November 2019, they invested Sh 42 million on representations made by the representatives of Cytonns of a higher and better return at an agreed interest rate of 20% per annum, payable quarterly for a tenor of two years.
“The Defendants’ representatives sketched a portrait of a liquid, stable and financially sound Cytonn which can be trusted by investors with colossal sums of monies, with no history of non-payment to investors,” they argued.
The three claim that the firm routinely and regularly paid the agreed monthly interest, until June 2020 when in a fragrant breach of the investment agreement stopped paying the agreed monthly interest.
They wrote an email to Cytonn on or about 22nd June 2020 where they sought to unilaterally vary the contractual investment terms which was against the contractual terms.
“Being dissatisfied with the unilateral alteration of contractual terms, we wrote to them through our advocates, seeking a refund of the Principal sum plus all accrued interest thereof, which as at 31st December, 2020 amounted to sh 46, 792,603,” the applicants said.
According to them, Cytonn responded on 29th January 2021, citing temporary liquidity of the fund and for the very first time in their contractual relationship cited in partnership agreement as the governing document of the fund.
“The partnership document that was never availed to us at anytime prior to the breach of the investment agreement…non-supply of all the governing documents to amounts to unconscionable, unfair, unreasonable, unjust or otherwise improper trade practices such as deception, misrepresentation, unfair and fraudulent conduct, contrary to the express provisions of the of the CPA,” they argue.
According to the businessmen, Cytonn is in utter breach of the investment agreement and wants the court to grant them compensation for violating their consumer Rights.