Over a dozen have been subject to strict action by the capital market regulator Securities and Exchange Commission (SEC) for misconduct some of which taken place over a decade ago.
As per different notices posted on the SEC’s web site, around 16 persons had been either warned or subject to compounding, without an admission of liability as provided for under section 51A of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987.
Alleged offences included insider dealing, market/price manipulation, creating a false market, faking signature and failure to immediately disclose material information.
Those who were subject to SEC action were A. Medonza, A.S. Hendavitharana, A.J.M.Y.B. Serasinghe, Buddhike Payoe, Dr. N.A. Senadeera, H.J.M.D.N. Bandara, I.P.A. Piyatissa, J.M. Alles, K. Boralessa, K. Keitheeshwaran, K.A.D.A. Meththasena, P.H.K. Boteju, V.R. Page, W.M.N.P. Rathnayaka, W.D.N.H. Perera and W.R. Dharmasena.
W.D.N.H. Perera was found creating a false market or misleading appearance of active trading in the shares of Regnis Lanka during 13 September to 13 October 2011 and ASCOT Holdings PLC during 5 September to 12 September 2011. The SEC decided to compound upon the payment of Rs. 3.3 million for each of the offences and funds credited to the Compensation Fund of the SEC.
K. Keitheeshwaran offence of submission of audited financial statements under false signatures in the Annual Reports of Singalanka Standard Chemicals PLC too was compounded.
Others within the 16 were issued with letters of warning. Nine persons were warned for their involvement in contributing to the creation of an appearance of a false market by their purchase of one share each in the shares of Browns Investments PLC.
Three were warned for failure to make immediate disclosure of material information relating to the financial crisis faced by Magpek Exports Ltd.
One was warned for conduct that created an appearance of insider trading activity prior to a dividend announcement and another for suspected price/market manipulation in the shares of On’ally Holdings PLC during the period June/July, 2011 in the capacity of an investment advisor.
Last year the SEC concluded nine investigations out of the 21 investigations that were carried forward from the previous year. It was decided that four investigations which were concluded during the year warranted enforcement action, whereas five investigations were concluded without recommending enforcement action due to non-availability of evidence to establish contraventions of the provisions of the SEC Act, Rules and/or Regulations made thereunder.
Further, it was decided to take enforcement action against eight personnel based on the findings elicited in connection with two other investigations. However, the investigation activities pertaining to certain other personnel connected to the aforesaid two investigations were in progress at the end of the year.
In 2021 SEC decided to initiate the following enforcement action based on the findings
of six investigations conducted by the SEC;
• Issued Show Cause Notices to nine personnel in respect of alleged Insider Dealing
• Issued Show Cause Notices to nine personnel in respect of alleged Market Manipulation and
• Resolved to issue Show Cause Notices to three personnel in respect of alleged violation of the Takeovers and Mergers Code
Further, the relevant findings of one investigation were referred to the CBSL for necessary action.
It was also resolved to commence five fully-fledged investigations. Consequently, by the end of 2021, 17 investigations were in progress and a summary of the status of the said investigations is given below;
• Out of the five investigations conducted into suspected Insider Dealing in the shares of listed companies, one investigation was commenced during 2021 and the other four investigations were at the final stage, as at the year end
• Out of the five investigations conducted into suspected Price/Market Manipulation in the shares of listed companies, two investigations were commenced during 2021 and two investigations were at the final stage, as at the year end
• Out of the six investigations conducted into suspected Price/Market Manipulation and/or Insider Dealing in the shares of listed companies five investigations were at the final stage, as at the end of the year
• Investigation conducted into possible violation of Takeovers and Mergers Code by a listed company was at the final stage, as at the end of the year
FT