Amidst accusations from some quarters that the Securities and Exchange Commission (SEC) was either dragging its feet in investigating rampant market malpractice at the Colombo Stock Exchange from 2009 to 2012, or sweeping it all under the carpet, the parliamentary Committee on Public Enterprises (COPE) is pushing the SEC to finalise the SEC Act which would give the regulator more teeth to deal with market offenders, and expedite investigations and show ‘significant’ results, especially with regard to the National Savings Bank (NSB)- The Finance Company PLC (TFC) fiasco.
Sources said top officials of the SEC were grilled for around two hours by COPE last week.
COPE had inquired into the delay in amending the SEC Act. Former SEC Chairman Dr. Thilak Karunaratne had initiated this move to deal with rampant market offences at the country’s bourse before he threw in the towel when highly connected investors who were under the SEC radar exerted enough pressure on the state, leaving the SEC to fight alone.
His predecessor, Ms. Indrani Sugathadasa had resigned less than a year earlier for the same reasons. Last week, the SEC’s Acting Director General Dr. D.B.P.H. Dissa Bandara resigned on principle although his term was to expire this May. He was appointed by Dr. Karunaratne.
The SEC told COPE that proposed amendments to the SEC Act were submitted to the Attorney General’s (AG) Department. The COPE had wanted the SEC to consistently remind the AG that the amendments ought to be finalised as a matter of priority.
COPE had inquired into the progress made on 17 investigations conducted by the SEC before Dr. Karunaratne had resigned.
COPE Chairman D.E.W. Gunasakara told The Island Financial Review that top officials of the SEC had been summoned to inquire into the progress of investigations that had commenced under former SEC head Dr. Thilak Karunaratne.
"We were told that some of the cases had been sent to the Attorney General’s Department. COPE wants the investigations expedited and we have asked for a report on the progress made thus far," Gunasakara said.
Last year, Gunasakara told the media that there was a mafia manipulating the market at the Colombo Stock Exchange and called on the government to strengthen the arm of Dr. Karunaratne and the SEC to crack-down on market offenders.
Sources said COPE had wanted the SEC to show significant results, and fast, as far as the investigations were concerned, especially those that commenced on Dr. Karunaratne’s watch.
The NSB-TFC transaction has been referred to the AG, the SEC said, but COPE wanted the SEC to expedite processes and show quick results.
UNP Ravi Karunanayake said the SEC had tried hard to suppress information on the investigations. "There is an attempt to sweep these under the carpet," he told The Island Financial Review.
"We kept pushing the SEC officials to tell COPE if there was any progress made in investigations. We were told the AG had been referred for clarifications. But the SEC is the regulator, we wanted to know what the outcomes of their investigations were. They were given a week to submit a report," the UNP MP said.
"We (COPE) also asked the SEC what was being done to rebuild investor confidence in the stock exchange, we expect a report on this as well," he said.
Karunanayake said Acting SEC DG Dr. Dissa Bandara found it difficult to answer many of the questions posed by COPE. "He was not confident before us and kept turning towards commission members of the SEC, this was probably why he tended his resignation."
"I have handed over the resignation letter," Dissa Bandara told Reuters last week. "I will resign with effect from May 27 and the resignation is based on my principles and the present set-up."