*Impeding the SEC an offence which has been allowed to go on with impunity for far too long
The Island - August 27, 2012, 8:05 pm
The recent developments in the Securities and Exchange Commission (SEC) has not only compromised the Treasury, Central Bank and the SEC, as their analysis of the situation did not find credibility in the eyes of the government which has allowed two chairpersons of the SEC to resign in under a year, and the country’s laws too have been allowed to be flouted openly.
Thilak Karunaratne and Ms. Indrani Sugathadasa both resigned from the chair of the SEC in order to uphold their principles as it became difficult for them to clamp down on market offenses with influential investors and their brokers campaigning successfully to put an end to investigations being carried out by the SEC.
As clearly stated in the SEC Act No. 36 of 1987, "any person who willfully obstructs any member of the Commission or any officer of the Commission in the performance of his legitimate duties shall be guilty of an offense, (and) any person who threatens or intimidates or makes any derogatory remarks or publishes any statement with a view to bringing disrepute or defaming the reputation of any member of the Commission, the Director General or any other officer or servant of the Commission in the course of discharging his duties shall be guilty of an offense".
Sources said the SEC had mulled the idea of taking those pressurising it to courts, but because the nature of the pressure and because the long drawn nature of legal battles, it was decided against it.
Meanwhile, Karunaratne has said that the pressure to resign had come from high places in the government, influenced by a certain section of the investor and broker community. He also said he would bare all the perpetrators if the 17 investigations into market offenses were not concluded.
While some investors and brokers are attempting to blame the SEC for the recent slump in the Colombo Stock Exchange, there are other investors and brokers who believe the market is not overregulated and that more needs to be done to clean up the bourse.
As we attempted to show yesterday, brokers have also shown how the bourse went bust after a boom fuelled by a credit bubble, a matter even the Treasury and Central Bank alluded to in their recent annual reports. Another reason for the bust is the severe erosion of credibility as the regulator became the regulated.
The Island Financial Review reliably learns that the SEC is working hard on the proposed amendments to the SEC Act together with the World Bank; with the draft to be submitted to the Legal Draftsman shortly.
Some analysts believe the SEC needs more teeth to successfully clamp down on market offenses, but others claim existing provisions in the Act are enough provided they were implemented.