By Amrith Gunasekara
Sri Lanka’s capital market watchdog- Securities and Exchange Commission (SEC) which earlier even housed regulators who had vested interests with stock brokers according to sources has recently started questioning financial journalists in the country diverting the watchdog’s original goal with related to maintaining a proper regulatory framework, Ceylon FT learns.
Accordingly market sources point out that SEC, which earlier even housed regulators who had vested interests with stock brokers, has recently sent a letter to a journalist who was formally attached to a prestigious electronic media house in the country. The SEC is reportedly probing as to how the journalist in question had originally come out with a story on a stock market transaction, by an emerging investor on the day, whereas the transaction had been executed nearly six months earlier.
“The question is whether our regulators are doing the right thing, in the world, the objective of the journalist is to break the news as it happens and they can report news; it does not have anything to do with inside trading or manipulation,” a stock market analyst told Ceylon FT.
He went on to pinpoint that when considering the international media reporting on stock market activities many prestigious media houses in the world have reported about stock market transactions when investors buy and sell on the same day and that it had nothing to do with market share price hikes or manipulation.
It is learnt that SEC has send a letter to a journalist who initially broke the story of an emerging investor buying 77 million shares of Pan Asian Power (PAP), for Rs 6 per share in a deal valued at Rs.460 million on 6 June 2011 according to reports. However market data had later outlined that the buyer had slowly sold quantities of the same counter on the same day and later whilst PAP traded as high as Rs.7.70 and above in intra-day trade.
“There are enough cases to be investigated by SEC such as when a particular stockbroker’s top official has 30% of a finance company and when such a finance company’s share that worth less than Rs.1.70 on introduction suddenly shoots up to Rs.18.60 and on the second day to Rs.27.90 with few internal trades; those are the cases to be investigated” another analyst highlighted.
According to him shares such as of Nanda Finance and Investments Ltd (NIFL) only 100 shares were traded at Rs 18.60 on 20 July, 2011 and on 21 July; 825,100 shares traded at 27.90 per share whilst he noted that paying Rs. 27.90 for a share having 11 months EPS of Rs. 0.34 and NAVPS of Rs. 4.53 as per the introductory document is just an unwise investor.
Similarly another investor and an analyst said that SEC should investigate shares such as Lanka Orix Finance Company (LOFC) which had risen over Rs.12 (Introductory price Rs.5) on the first day through introduction were shed (52 million shares at Rs.12 per share on 22 September 2011) by its second largest shareholder India Focus Cardinal Fund (100 million shares or 3.57%, as at 21 September 2011), whereas on the same day Indian media reports said that Securities and Exchange Board of India (SEBI) banned India Focus Cardinal Fund, which was the second largest shareholder of LOFC and four other international funds from the Indian stock market for their alleged role in stock manipulation and insider trading.
“Such cases have never even been investigated by our market watchdog” a top analyst said. (Ceylon Today Online)