SEC says to continue old and new investigations ‘to the very end’
The Securities and Exchange Commission (SEC) has seen a ‘few’ stock market offences during the past three months, its new chairman Dr Nalaka Godahewa now nearly three months in the hot seat said, but reiterated that the regulator will continue the past, pending and new probes to the end.
Krishan Balendra Chairman, CSE
- Krishan Balendra Chairman, CSE
“We have seen a few offences and all investigations will continue,” he told the Business Times in response to a question whether during his tenure he has witnessed any stock market malpractices. He said this on the sidelines of a joint press conference hosted by the SEC, Colombo Stock Exchange (CSE), Colombo Stock Brokers’ Association (CSBA), Unit Trust Association of Sri Lanka and the Margin Providers’ Association at the SEC headquarters at the World Trade Centre on Thursday. He reiterated that he will not be ‘anybody’s tool’.
Surekha Sellahewa, CEO CSE noted that so far this year CSE has got 39 complaints. “There’s a process that is in place to detect these malpractices,” she added.
Dr. Godahewa started the media conference by urging journalists to come together on the positives and emphasize the bigger picture of capital market development in a bid to draw local retail investors and more foreign players, with current investment levels way below the country’s potential. “Retailers listen to the media. It’s like gospel to them. This is why we want to engage the media,” he said. When the reporters pointed out that two chairpersons resigned under a year of each other on alleged pressure from a group of high net worth investors and their crony brokers for trying to clean up the market, he said that he cannot comment on their term.
The journalists then pointed out that they will be reporting on events and facts based on a whole spectrum of time and not based only on his time in the SEC. He was also forced to apologise to a journalist when he said, “I know why you are here. You are here looking for all the wrongs.” When journalists voiced their protest over his remark, Dr. Godahewa apologised.
He said journalists should not use the word ‘mafia’ to describe a so-called group of high net worth investors and their chummy brokers. “There is no mafia. There may have been manipulators but they were not conspiring to manipulate the market,” he said. He said that when the term mafia in Sri Lanka is Googled, then stock market appears.
“This isn’t a laughing matter. This is so detrimental to attracting foreign players. There certainly is no mafia; it is the wrong word to use because a mafia is a gang that thrives on crimes such as extortion, and murder,” he said. When the reporters pointed out that foreign players have been net buyers (despite the word mafia being rampantly used), he agreed that it is so.
Nalaka Godahewa
Ms. Sellahewa noted that there should be responsible journalism, when some reporters wondered about the independence at CSE and SEC. “Responsible journalism is not about hiding facts,” a reporter said after the press conference. Dr Godahewa said that a 10-point roadmap agenda including expediting SEC Act amendments to be in line with IOSCO standards; encourage more listings (public and private) to increase liquidity and market capitalization; attract new funds (foreign and local) to broad base the market; develop infrastructure (trading, back office systems, etc); improve efficiency, develop the corporate debt market; intensify education and awareness in order to have an educated investor base and to enhance investor confidence; develop unit trusts industry as a conduit to mobilise savings of the less-sophisticated small investors; strengthen risk management systems (RMS, CCP, DVP risk-based capital/supervision, broker back office); develop new products (derivatives, ETF, commodities) to broad base the product range and demutualise the CSE from a member-owned company to a company owned by shareholders in line with international standards has been formulated. “None of these steps are new and in fact many of the initiatives are the same as those which the Colombo Stock Exchange had developed previously, but these are on-going processes and we hope to finish some of them within this year whilst others will be achieved over the 3-year timeframe,” he said.
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