The President convened a meeting with officials from the SEC, Colombo Stock Exchange (CSE), broker firms and high net-worth investors yesterday (20), where one particular investor gave a fiery presentation on how the SEC was sabotaging the stock exchange.
This investor went on to allege that certain officials in the SEC and journalists were trying hard to bring down the stock exchange and discredit the government.
Sources said the meeting with the President was intended for a select few SEC-bashers, but a change of heart at the last moment saw representatives from all stakeholder firms participate.
Two speakers from the broker community speaking up at the meeting defended the SEC and said the market was not over regulated (see yesterday’s The Island Financial Review)
SEC Chairman Thilak Karunaratne had then defended the regulator’s stance, and sources said his forceful counter arguments surprised everybody.
"The meeting was intended to vilify the SEC and give those involved in market irregularities a free hand. But unlike last year’s meeting with the President, where the SEC lost its chairperson and Director General for fighting market malpractice, this time around the regulator and like minded stakeholders were able to stand their ground," a source said.
Treasury Secretary Dr. P. B. Jayasundera told the forum that the meeting was convened to find out how the next budget could assist in boosting the country’s capital market.
"As far as the next budget and capital market development was concerned, the meeting was unproductive, but certain investors and the regulator did let off some steam," a source said.
Influential investors had been lobbying for a regulation free capital market and a stop to investigations into market malpractices and the President caved in last year. But this time, President Mahinda Rajapaksa told the forum that he would no longer entertain such meetings and that industry disputes could be settled with Dr. Jayasundera instead.
The SEC is investigating rampant market malpractices at the Colombo Stock Exchange. Those being investigated are trying to play the nationalism card to win sympathy and support. One such investor who was being investigated last year sent us a letter accusing the SEC of being unpatriotic.
The stock exchange has fallen near 20 percent so far this year, and equities researchers say this is because high interest rates are driving away investors.
‘Market manipulators who brought dud stocks so as to manipulate the market and earn thumping gains were now saddled with this junk and trying their hardest to wriggle out of investigations into pumping and dumping, which was an offence,’ market analysts said.