SEC reopens eight ‘pump & dump’ cases
The Securities and Exchange Commission of Sri Lanka (SEC), has dealt a tough blow against pump and dump operators of the past, reopening eight cases. The regulator, under fire for ‘not doing much’ during the past three years, is now flexing its muscle, according to the SEC Annual Report for 2016.
Amidst implementing and shoring up the capacity to implement structural changes, governance practices and many other changes, the regulator has completed three probes into market manipulations while 26 cases are in progress, it said.
Among these, eight previously concluded cases during the infamous ‘pump and dump’ era were re-opened amidst further investigations into three cases which were reopened in 2015 are being conducted. “As at end 2016 further investigations into these cases were in progress.” Certain cases were awaiting the Attorney General’s (AG) opinion, the SEC report revealed.
“We continued to upgrade our investigative skills in order to effectively detect and investigate potential securities law violations. During the year, the new investigation team was able to complete three investigation and four others are at different stages of completion,” SEC chairman Tilak Karunaratne has said in his annual statement. Being a signatory to the International Organisation of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding (MMoU), the SEC successfully sought assistance from several jurisdictions to conduct investigations, he said.
The SEC in 2016 revisited a number of recently concluded investigations, and, finding them to have been summarily assessed and prematurely concluded, decided to subject them to further scrutiny, the SEC Director General Vajira Wijegunawardane has said in his statement.
“Our Investigations Division in now entrusted with a larger-than-usual caseload, the handling of which, to date, has been laudable,” he has added.
Investigations of a criminal nature are often long-drawn and time-consuming, but these investigations are being duly conducted, he has said noting that with enforcement actions in several cases are imminent over the next year. “We are well-prepared for the journey ahead and prevail upon regulatees and participants alike for their cooperation in ensuring that the capital market of Sri Lanka is at its safest-year for investors.”
The SEC aims to install a technologically advanced system for market surveillance and regulatory reporting to ensure that transactions are carried out in compliance with the rules governing capital market activity, the report alluded noting that such a system would enable the regulator to detect and deter potential market abuse and enhance its ability to pre-empt the occurrence of disruptions in the market as a result of irregular trading activity.
Not only direct participants, but others in the periphery will also be scrutinised by SEC in the future. “It is also proposed to cast duties on supplementary service providers including those hitherto unregulated by the SEC. This is to ensure that such persons remain accountable for the scope and quality of work performed in relation to the capital market. The SEC also hopes to extend its regulatory reach to encompass other hitherto-unregulated entities and instruments,” the report said.
During the past year the regulator handled 52 complaints, conducted 93 On-site inspections, 2,347 off-site reviews, provided 13 analytical trading reports to law enforcement agencies, sought clarifications / cautioned 36 brokers / traders and 23 investors through market monitoring and compiled 7- surveillance referrals, the report added.