* SEC fast tracks investigations into stock exchange mafia
* Ceylon Chamber of Commerce supports SEC
The capital market watchdog the Securities and Exchange Commission of Sri Lanka (SEC) has fast tracked investigations into market manipulation and is expected to present the Parliamentary Committee of Public Enterprises (COPE) a detailed report on its outcome before the end of this month.
While some market stakeholders blame the SEC for over regulating the market with various directives that are stymieing investor appetite, analysts point out that there are veiled attempts to prevent these investigations from exposing a mafia in the Colombo Stock Exchange (CSE), with attempts being made to vilify journalists and officials alike who have been working hard to clamp down on market irregularities.
"How can the government not support those working towards a clean market where rule of law prevails?" is the question many are asking today.
As previously reported in these pages, the COPE and other respected individuals such as minority shareholder rights activist K. C. Vignarajah and former Ceylon Chamber of Commerce Chairman C. P. De Silva have acknowledged that the SEC should be empowered to tackle unsavoury elements operating in the CSE. The COPE last week went as far as to urge the government to immediately amend the SEC Act to give the watchdog more teeth to investigate and punish those found guilty of market malpractices.
Several stock brokers have also commended the SEC, especially with regard to the credit restrictions warning that lax credit rules could put the entire system at risk.
However, the government support of the SEC is seriously lacking and questions are being asked as to who the government is trying to shield.
Sources close to the SEC yesterday told The Island Financial Review that SEC Chairman Thilak Karunaratne was under severe pressure to resign. The pressure was coming from high places.
A delegation from the Ceylon Chamber of Commerce led by its Chairman Susantha Ratnayake recently met with top officials of the SEC and vowed to support it, sources said. The COPE has also expressed similar sentiments. But the pressure keeps mounting.
"What is more important, working hard to stamp out market malpractices and build a stable, credible exchange, or abandoning regulation so that the stock exchange can move up again?" a market analyst asked, not wanting to be named.
"The behaviour of the Treasury and the Ministry of Finance and Planning have given the impression that the SEC was not enjoying their support, that those being investigated by the SEC have much more clout.
"The performance of the stock exchange is perceived to reflect the economic health of the country. Perhaps this is what is worrying the government, but then the government cannot be that daft to believe that the regulations and investigations must all go away to make the exchange move up again, and that credibility and rule of law do not mean anything at all as long as a few are making millions in the stock exchange."
Some analysts however, contend that the SEC has gone overboard.
"Some of the regulations are unnecessary and the market should be allowed to speculate more freely. This is the hallmark of the free economy. People should be allowed to take risks and reap the benefits or suffer the consequences what ever the outcome may be. The SEC should relax some of its regulations. But we must draw a line here. While relaxing regulations, the SEC must come down hard on market offenders. These offenders should be named and shamed without fear or favour. The stock exchange must be free, but with a zero tolerance on market offences. The sooner the SEC sends a crook or two to jail the better for all. But this is the crux of the problem isn’t it, we are in a country where who you know is all that matters," another analyst said, also not wanting to be named
"What is at stake is not the SEC Chairman’s post, but the credibility of the country. Let the rule of law prevail, is it too much to ask?" he said.