COPE resumes stock market probe on Tuesday
Officials of the Securities and Exchange Commission (SEC), the Colombo Stock Exchange (CSE) and the Central Bank have been summoned before the Parliamentary Committee on Public Enterprises (COPE) on Tuesday in an ongoing probe of the country’s troubled capital markets.
Of particular interest is a confidential document submitted by the SEC nearly a month ago detailing the progress of investigations, probes or inquiries since 2010.
According to the documents submitted by the SEC to COPE, which was exclusively reported by the Business Times on September 2, investigations, probes or inquiries were ongoing or completed involving trades or transactions or other issues in 14 companies in 2010; 18 in 2011 and six in 2012.
However this ‘revealing’ document, though received by the COPE office in Parliament some weeks ago was not distributed to its members, which is a normal practice in COPE discussions.
When asked, COPE Chairman and MP D.E.W. Gunasekara told the Business Times that he is not prepared to divulge anything on the stock market issue and the list of SEC investigations.
However he added that the SEC document would be handed over to COPE members tomorrow.
UNP MP and COPE member Ravi Karunanayake told the Business Times that the COPE meeting has been convened to probe into manipulative actions and malpractices being carried out at the CSE and especially on the National Savings Bank (NSB) and The Finance Company (TFC) share transaction.
He revealed that this was in response to his letter sent to the COPE Chairman recently requesting him to summon officials of the SEC and CSE to investigate into insider trading being pursued by a few at the expense of the majority and to expose and elimnate white collar fraudsters.
The NSB-TFC deal has led to exposing many problems, he added.
When contacted JVP MP Sunil Handunneththi, another COPE member, said he was unaware of the SEC document but noted that his party would raise recent stock market deals at the meeting.
Meanwhile former SEC Chaiman Thilak Karunaratne said the regulator has finalised a draft amendment to the SEC Act giving it more powers to deal with market manipulation.
Under these amendments, new administrative sanctions, civil enforcement powers and new provisions on licensing including a two tiered licensing scheme will be introduced to tackle market manipulation, he said addressing the recent 46th AGM of the International Chamber of Commerce in Colombo.
Mr Karunaratne, who quit saying the decision was due to political pressure, noted that a proposal has been made to appoint an Industry Consultative Committee to assist in developing the future direction of the Sri Lankan Capital Market.
He stressed the need to give more powers to the SEC to minimise market manipulation so that the bourse can thrive with all types of investors having access to a level playing field.
Praising a Business Times initiative to facilitate the formation of an association of small shareholders, he said that such associations would have to be nurtured by the SEC and the Colombo Stock Exchange so that independent monitoring could be possible.“Such associations in Canada, Malaysia and Thailand can even take listed companies to courts if proper information is not made public,” he added. He emphasised the need to rescue the stock exchange from external interference and political meddling.
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