Brokers ‘jittery’ with high profile arrests
Now that the Financial Crimes Investigation Division has made sure some high profile offenders of the stock market are being prosecuted, other stock holders in the industry are getting jittery, according to sources. In particular the stockbrokers are worried, according to them. “Some of them are ‘clearly’ guilty of certain irregularities, especially of insider trading during the 2011-2013 period. There was no action taken against them, mainly because they were members or connected to the stock mafia,” a source told the Business Times.
This came in the wake of Nalaka Godahewa, the former Chairman of the Securities and Exchange Commission (SEC) and Dhammika Perera, former Deputy Director General SEC along with Premier Sports Ex-Director Ronnie Ibrahim were produced in Court this week and remanded till December 14 by Fort Magistrate Priyantha Liyanage on charges of misappropriating Rs.5 million of SEC funds.The SEC has started a fresh investigation against former Environmental Resources Investments PLC (ERI) Directors for alleged stock market manipulation, the source said, adding that SEC has also reopened cases against the directors of two other companies also on the same charges.
Probes of market manipulation and insider trading against 17 investors, brokers and institutions, including high-profile businessmen were nearing completion in August 2012 when some powerful investors complained to President Mahinda Rajapaksa regarding the then SEC Chairman Thilak Karunaratne saying he was enforcing rules that were too rigid and not market-friendly. Mr. Karunaratne who resigned during this time after a losing battle to strengthen the regulatory process, returned to the SEC with many saying that the investigations against past malpractices will be restarted. After his return, the complaints that SEC has got range from manipulation, insider dreading, pump and dump, stockbrokers and investment advisors misleading small shareholders, trading on accounts under third party names etc.