More rules to rap insider trading from SEC

The Securities and Exchange Commission of Sri Lanka (SEC) is gearing to introduce more rules governing intermediaries in the stock market before the end of the year, in an effort to bring in ‘fit and proper’ practices in the stock market.

A SEC official told The Sunday Times FT that these rules would be implemented through the Colombo Stock Exchange (CSE) regulation for all intermediaries including fund managers, share issue underwriters, margin providers, central depository system (CDS) agents and credit rating agencies.

“If an insider trading case is compounded, then the particular stockbroker would be prohibited from practicing for three years from the date the offence is compounded,” he explained. He said if the case is before the court, the offender cannot practice till it is over. “If he is found guilty by the court, he cannot enter the industry at all,” he added. This follows the SEC initiating action in the Magistrate's Court, Fort, against Sajee Lakshman Perera for insider dealing. Perera was found guilty of ‘creating a false or misleading appearance or impression with respect to the market and/or price of the Ceylon Grain Elevators Limited share, in contravention of the provisions contained in Rule 12 of the SEC Rules and providing the SEC with untrue, incorrect and/or misleading information during the course of its investigation’.

“The accused Mr. Sajee Lakshman Perera appealed to the SEC to compound the offence under Section 51A. of the SEC Act (as amended) upon Mr. Sajee Lakshman Perera paying a sum of Rs. 550,000 to the Compensation Fund of the SEC under Section 38 of the SEC Act (as amended),” Channa de Silva Director General, SEC said in the release.

He said that as due consideration of the charges levelled against the accused, the Commission acceded to the appeal subject to the settlement of this sum in full. “The SEC withdrew the action against the accused Mr. Sajee Lakshman Perera on 25th October 2006,” he has added.

The other unnamed SEC official also said there are some more cases against insider dealing which the SEC is investigating and the results will be out soon.