SEC unbowed (so far) in catching manipulators
The Securities and Exchange Commission of Sri Lanka (SEC) is revving its resources to serve justice which has preempted other investors to seek justice. Certain traders who lost heavily a few years ago from transactions done through some broking houses want their (lost) cash.
These firms are fielding calls from some investors, sources said. In the latest in a series of actions instituted by the SEC to bring capital market manipulators to book, a stockbroking firm paid compensation to an investor recently with SEC sources saying that many more show cause letters and requests for explanations have been sent to certain brokers.
Capital TRUST Securities (Pvt.) Ltd, owned by CEO Tushan Wickramasinghe, paid Rs. 6 million as compensation to its client, Reji Goonewardene, former Finance Director Food and Beverages Sector, John Keells Holdings for not acting in the client’s best interest in 2015.
Upon the directions of the SEC, the Colombo Stock Exchange (CSE) levied a fine of Rs. 100,000 from the firm concerning the same matter.
Stock market sources said that this matter was laid to rest six years ago, but after the investor complained again to the CSE in 2015 the matter had been resurrected when SEC Chairman Ranel Wijesinha took office in mid-2018. The transactions were those of 2011. ‘Mrs. Goonawardena complained after four and a half years after she was disgruntled by so many complaints which weren’t properly acted upon,” a stockbroker told the Business Times.
On the back of this incident, some traders who lost heavily from 2011 and prior to 2014 are also calling other stockbrokers, threatening to either minimise or recover their losses. “We have received some calls from investors who traded with us a long time ago. They lost during that time and they are demanding money,” a second broker told the Business Times. Another stockbroker said that many investors don’t understand the market mechanics. “Those who had taken the wrong call in investing are also demanding cash. This is a very bad precedent,” he said.
The regulator is also trying to serve justice on offenders during 2011 to 2013 when the worst manipulations of the stock market by high net worth investors happened creating a bubble.
The SEC on July 25 filed action before the Fort Magistrate’s Court against four stockbrokers for market manipulation, conspiracy to commit market manipulation and aiding and abetting shares of Radiant Gems International PLC (RGEM) listed on the CSE during September 2 to 29, 2011. In June the SEC filed charges against Ireland-based brothers-in-law after six long years on charges of market/price manipulation in doctor channelling company, E-Channelling PLC.