Errant broker licences hang in the balance
Sri Lanka’s Securities and Exchange Commission (SEC) will ‘critically’ re-look at licences of some market intermediaries who have stepped out of line, a top official said. SEC Chairman Thilak Karunaratne told the Business Times that the regulator has many ‘issues’ but only with ‘very few’ market intermediaries. “We will have to evaluate their licences when they come up for renewal at year end,” he said. He added that the SEC is working on six major cases as part of probes that will be done by a ‘totally’ revamped investigations division.
The SEC reorganisation was completed this month. “We revamped the whole investigation division. We changed staff,” he said, adding that SEC had advertised for staff, including management trainees for certain divisions at SEC. “We also called for new staff for the Investigations Division.”Mr. Karunaratne added that as part of the restructure the SEC has also internally shifted staff from certain divisions to the Investigations Division. “I have no confidence in the Investigations Division,” he stressed, noting that contrary to popular belief no probes have been shelved.
He added that most cases from 2010-2012 periods have been reopened and that three more are also being probed. When asked that despite probing, the SEC is not armed with enough teeth to prosecute the offenders, Mr. Karunaratne said, “We’ll bite with the teeth we have”.
Mr. Karunaratne was first appointed to the SEC in December 2011 but later resigned accusing the government of interference in 17 ongoing cases. When asked why he changed his mind after declaring to ‘never’ take up political appointments, he said that the PM wanted him to complete some unfinished business at the SEC and that he couldnt say ‘no’ to that request.
He resumed his role as chairman in January this year, an honorary position and he’s not on the SEC payroll. He said that the first draft of the SEC Act was completed last week and that the new Act will be civil and administrative compliant. When asked about the charge of ‘not market friendly’ being levelled at him, he said, “Regulations don’t go behind stockbrokers. The brokers must request for meetings, etc which the new President of the Stockbroker Association did and we met them recently. It was more of an ice breaker and we decided to meet as and when required”.
When asked why SEC had advertised for Capital Market Development staff when he had reiterated that the regulator’s mandate isn’t in this area, Mr. Karunaratne responded saying that Capital Market Development entails educating, improving rules, better supervision of market intermediaries.“We spend a lot of money on these aspects. We will give all our support to the Colombo Stock Exchange in order to do their investment promotion.”