"If the minister of finance was genuinely concerned in re-establishing a fair and equitable regulatory regime at the CSE would he have appointed persons with strong connections to entities being investigated for alleged securities fraud?," opposition legislator Harsha de Silva said in a statement.
"While not quite yet accusing anyone of fraud at least two of the three appointees are connected to one or more entities that media today has reported as being investigated by the SEC."
SEC chairman Nalaka Godahewa was connected to Colombo Land and Development Company, de Silva said.
Shortly before joining the SEC Godahewa resigned from George Steuarts Finance, a firm connected to Dilith Jayaweera of Divasa Equity, who has received letters from the SEC and made a presentation to the president before the ouster of the earlier SEC chief.
Godahewa was quoted as saying in the Island newspaper that he would continue investigations.
Former regulator Tilak Karunaratne has said that 17 probes were reaching their end when he was forced to resign.
A second recent SEC appointment, Priyantha Fernando was connected to Taprobane Holdings whose stock broking arm was embroiled in a cancelled deal where stock was attempted to be sold to a state bank at an inflated price, de Silva said.
"It is noteworthy that he headed the Central Bank’s investment committee of the EPF (Employees Provident Fund) only months prior to being appointed to the board of Tabrobane," de Silva said.
Several stock purchases of the EPF have also been controversial.
"Is it not understood that the perception of being clean is as important as being clean; particularly in the background of serious allegations of fraud?," de Silva asked.
"If the minister of finance is honestly interested in the sustainable development of Sri Lanka and the well-being of her people then he should cancel these appointments and make fresh choices from those who are unconnected to entities being investigated.
"Indeed it is a sad new chapter that we as a country have entered in to. Actions like these will only harm confidence in the markets and discourage genuine investments sorely needed for development of the country. "
A third appointment to the SEC, Sujeewa Mudalige, is a former head of Sri Lanka's institute of chartered accountants, who has earlier served on the SEC commission. There have been no reports that he had been soft on securities fraud earlier.
Though the ouster of two SEC chiefs who were investigating securities fraud has created a controversy there have been numerous reports of police officials who investigate crimes being transferred, and criminal justice process being subverted by elected rulers.
Analysts say Sri Lanka's rule of law and justice cannot be re-established without an overhaul of the country's state machinery.
Legal analysts say lawlessness in Sri Lanka started to become institutionalized through a constitution enacted in 1972 which broke the island's civil service commission and the institution of permanent secretaries.
The 1972 constitution made the function of appointing, transferring and disciplining ministry secretaries a function of the cabinet, undermining their security of tenure and ability to act justly by the people.
The 1978 constitution made the President the sole arbiter of the process, completely destroying the public service and paving the way for an arbitrary state machinery. Critics say a once revered 'public service' was then turned into a 'rulers' service'.
Sri Lanka recently 'reshuffled' its impermanent ministry secretaries, a process that is reserved for ministers in free countries.