SEC issues notice to ERI

Saturday, 2 July 2011 01:23 - - {{hitsCtrl.values.hits}}

The Securities and Exchange Commission (SEC) is said to have issued a “notice of action” to Environmental Resource Investments (ERI) this week.

The capital market regulator’s move is following the completion of its findings and the notice is over an issue of lack of or non-disclosure of a related party major transaction which is considered a serious lapse.

Though SEC investigating ERI or a series of correspondences between the two has been in the news for more than a year neither party had gone public about it. This regulation by “silence” had irked and caused concerns among some stakeholders since it leads of various speculations. A proper disclosure by both regulator and/or ERI on the status quo of correspondences or seeking information has been suggested for investors to get a clearer idea.

Officials of the SEC and ERI were not available for a confirmation of market speculation yesterday.

The Colombo Bourse this week saw renewed interest on ERI so much so that on Monday ERI and several of its warrants and related party securities of Ceylon Leather and Dankotuwa Porcelain dominated the list of top 10 percentage-wise gainers. On Tuesday ERI gained to the week’s highest of Rs. 82 but apparent profit taking dragged the price as the stock finished the week at Rs. 68.20, still up by Rs. 6.10 over the previous week. It was one of the biggest weekly gains for ERI in recent months. Two of its warrants too closed the week up Rs. 4.40 and Rs. 5.

Subsidiary Ceylon Leather saw its share price rise by a recent high of Rs. 15.40 to finish the week at Rs. 94.90 whilst all of its warrants also gained. This former was partly on the news that ERI bought 10,700 shares of Ceylon Leather on Monday and 533,599 shares on Wednesday thereby increasing its stake to 74.64% or 18.66 million shares. As at 31 March, 2011, ERI held a 72.47% stake in Ceylon Leather.