Financial Times

Trio charged with insider trading
The Securities and Exchange Commission (SEC), on Friday filed action against a director of Nawaloka Hospitals, his wife (both chartered accountants) and their daughter for insider dealing, an offence if found guilty could result in a jail term of up to five years.

Action was filed in the Fort Magistrate’s Court against Jagoda Arachchige Sunil Piyawardena, Chandra Piyawardena and their daughter Jagoda Arachchige Chamila Wijeyanthi Piyawardena on offences relating to “conspiracy in the commission of insider dealing and insider dealing,” the SEC said in a statement. SEC officials declined to comment beyond the statement, but informed sources said the Piyawardene family was already informed of the notice of action two weeks ago. Insider dealing could also be settled out of court through a process of compounding where the “guilty” party pays a penalty.

Sources said authorities were likely to pursue the case till its conclusion except in the case of daughter Jagoda, 20-years who’s studying abroad, in which case compounding could be considered. The statement said, “the charges have been framed against Mr. Piyawardena on the basis that he was a Director and the Chief Financial Officer of Nawaloka Hospitals Ltd. and a Director of the Company ESES Secretaries (Pvt) Ltd, the company secretary to Nawaloka Hospitals Ltd. and against Mrs Piyawardena on the basis that she was a Director of the said ESES Secretaries (Pvt) Ltd. and that both parties traded in the shares of Nawaloka Hospitals Ltd. on the basis of price sensitive information prior to its disclosure to the market.

It said charges of insider dealings filed against Ms Jagoda Piyawardena were on the basis that she traded in the shares of Nawaloka Hospitals Ltd., on the basis of price sensitive information prior to its disclosure to the market.
Sources said the couple purchased one million Nawaloka shares each, while the daughter had bought two million shares— a total of four million shares, all during a two month period from January 2005 to February 15, 2005.
On February 15, Nawaloka announced regional expansion plans expected to lead to mini hospitals and this saw share prices rising to Rs. 9 per share from Rs. 3 before the announcement.

The SEC has so far compounded over Rs. 40 million worth of cases, amongst them Dinesh J. Ambani and Metropolitan Office Ltd. for Rs. 3.3 million each, Ana Punchihewa and Dhammika Fernando of Pure Beverages for Rs. 5 million each, Norman Gunawardena for Rs. 2.5 million and (the late) Michael Mack for Rs. 3.3 million.These sums were credited to the compensation fund.

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