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June 22, 2011 (LBO) - Sri Lanka's capital markets regulator probed 50 complaints of abnormal market movements and manipulation in 2010 of which some were dropped on lack of evidence while others were being pursued.
The Securities and Exchange Commission (SEC) said it conducted 20 investigations during the year of which two were suspended as the issues relating to the investigations were subject matters of pending litigation.
Cases against three individuals, charged after investigations prior to 2010, were compounded upon payment of a million rupees by one individual and 3.3 million rupees by each of the other two individuals to the SEC compensation fund.
Of the five insider dealing investigations done by the SEC, two were not pursued legally as they could not be proved, according to the SEC annual report.
"However, both such investors being directors of two listed companies have purchased shares of the respective companies whilst the Boards of Directors of the said companies were discussing dividends," the report said.
"Therefore, the SEC cautioned both individuals in writing."
A third investigation was terminated without the SEC taking any enforcement action due to the absence of evidence to legally sustain a case of insider dealing against the investor concerned.
At the end of 2010, two investigations into suspected insider dealing were pending.
The SEC also probed six cases of market manipulation with one dropped owing to pending litigation and another terminated in the absence of evidence to legally sustain a case of market manipulation.
At end-2010, four investigations into suspected market or price manipulation were pending.
During 2010, SEC investigators forwarded 30 referrals to its Surveillance and Investigations Committee for perusal.
The SEC report said 33 percent of detections were possible cases of insider dealing, 27 percent of market manipulations, seven percent reported as 'front running' while the balance 33 percent were issues related to takeovers and mergers, rumour verifications and dealing by directors of Default Board companies.
Front running is trading in shares ahead of a significant purchase or sale of securities of the company for a client, with the intent to profit by trading in the shares later.
In 2010, the SEC began using a new automated surveillance system it acquired from Millennium IT (Software), a Sri Lankan firm now a member of the London Stock Exchange.
The new system supports "multidimensional historical data", has the capability for pattern recognition to quickly identify abnormal transactions, and provides an analytic platform that supports and accelerates investigations and research functions of the SEC, it said.
"The system can be linked to several data bases of insiders of listed companies, their related parties and market intermediaries to accommodate speedy detection of insider dealing."
"We engage in real time monitoring of the market to detect abnormal market movements and manipulations in order to protect the integrity of the securities market and its participants," the annual report said.
"We undertake frontline market surveillance functions and monitor trading activities of the CSE on a real time basis to detect irregular market activities."
The SEC conducts in-depth surveillance analysis of trading data, reviews surveillance reports received from the Colombo bourse, prepares surveillance reports and makes recommendations on appropriate action to be taken in relation to surveillance findings.
During the year the SEC also reviewed 127 annual reports of listed companies and issued five letters of caution and 39 letters of comments.
http://www.lbo.lk/fullstory.php?nid=1487752813
The Securities and Exchange Commission (SEC) said it conducted 20 investigations during the year of which two were suspended as the issues relating to the investigations were subject matters of pending litigation.
Cases against three individuals, charged after investigations prior to 2010, were compounded upon payment of a million rupees by one individual and 3.3 million rupees by each of the other two individuals to the SEC compensation fund.
Of the five insider dealing investigations done by the SEC, two were not pursued legally as they could not be proved, according to the SEC annual report.
"However, both such investors being directors of two listed companies have purchased shares of the respective companies whilst the Boards of Directors of the said companies were discussing dividends," the report said.
"Therefore, the SEC cautioned both individuals in writing."
A third investigation was terminated without the SEC taking any enforcement action due to the absence of evidence to legally sustain a case of insider dealing against the investor concerned.
At the end of 2010, two investigations into suspected insider dealing were pending.
The SEC also probed six cases of market manipulation with one dropped owing to pending litigation and another terminated in the absence of evidence to legally sustain a case of market manipulation.
At end-2010, four investigations into suspected market or price manipulation were pending.
During 2010, SEC investigators forwarded 30 referrals to its Surveillance and Investigations Committee for perusal.
The SEC report said 33 percent of detections were possible cases of insider dealing, 27 percent of market manipulations, seven percent reported as 'front running' while the balance 33 percent were issues related to takeovers and mergers, rumour verifications and dealing by directors of Default Board companies.
Front running is trading in shares ahead of a significant purchase or sale of securities of the company for a client, with the intent to profit by trading in the shares later.
In 2010, the SEC began using a new automated surveillance system it acquired from Millennium IT (Software), a Sri Lankan firm now a member of the London Stock Exchange.
The new system supports "multidimensional historical data", has the capability for pattern recognition to quickly identify abnormal transactions, and provides an analytic platform that supports and accelerates investigations and research functions of the SEC, it said.
"The system can be linked to several data bases of insiders of listed companies, their related parties and market intermediaries to accommodate speedy detection of insider dealing."
"We engage in real time monitoring of the market to detect abnormal market movements and manipulations in order to protect the integrity of the securities market and its participants," the annual report said.
"We undertake frontline market surveillance functions and monitor trading activities of the CSE on a real time basis to detect irregular market activities."
The SEC conducts in-depth surveillance analysis of trading data, reviews surveillance reports received from the Colombo bourse, prepares surveillance reports and makes recommendations on appropriate action to be taken in relation to surveillance findings.
During the year the SEC also reviewed 127 annual reports of listed companies and issued five letters of caution and 39 letters of comments.
http://www.lbo.lk/fullstory.php?nid=1487752813
