Financial Times

SEC compounds insider dealing offence against former boss
The Securities and Exchange Commission (SEC) announced last week it had imposed fines and settled the controversial insider dealing cases against its former chairman Michael Mack and former Aitken Spence director Norman Gunewardene at the request of the accused to compound the offences.

The SEC said in separate statements on the two cases that "in terms of the SEC Act, compounding does not entail a finding of guilt." However The Sunday Times FT discovered there is no specific provision in the SEC Act that says compounding does not entail a finding of guilt.

SEC chairman Dr Dayanath Jayasuriya, who was director general at the time the probe started and who resigned in protest against efforts to stop the investigation, declined comment on the discrepancy. The SEC director general Palitha Gunawardena was abroad and not available for comment.

Mack, also a former chairman of Aitken Spence, was fined Rs 3.3 million and Gunewardene Rs 2.5 million. The fines were paid to the SEC Compensation Fund. Any person if found guilty of an offence under the SEC Act for which no penalty is expressly provided for, is liable on conviction after summary trial by a Magistrate to imprisonment of either description for a period not exceeding five years or to a fine not exceeding Rs 10 million or to both such imprisonment and fine. The two former Spence directors, who have maintained they are innocent and had not committed any offence, have withdrawn their writ applications in Appeal Court seeking to quash the SEC's decision to prosecute them for alleged insider dealing in Aiten Spence shares and the SEC is expected not to proceed with the prosecution.

The SEC's decision to compound the offences was taken at the commissioners meeting on September 24, Friday. Tthe same day Sudath Perera Associates, representing Michael Mack, wrote to the SEC and requesting that the offence be compounded on payment of a fine.

This was just five days before a special hearing fixed by Appeal Court for six successive days was scheduled to start on September 29, Wednesday. Sudath Perera Associates asked the SEC to consider its request to compound the offence as "urgent" and a decision be taken.

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