SEC won’t bow to pressures on probes: Chairperson

Reuters: Securities and Exchange Commission (SEC) has said the regulatory body will not bow to any pressure against investigating allegations of market manipulation and undue price fluctuations.

Chairwoman Indrani Sugathadasa also reiterated a denial of speculation that her Deputy is being forced to resign after influential investors complained to President Mahinda Rajapaksa, who has the SEC in his portfolio as Finance Minister.

           

           

SEC Director General Malik Cader has caused unhappiness in some circles for his moves to curb manipulation and excessive margin trading.





Some investors and brokers say such practices are hurting the Colombo Stock Exchange, which was Asia’s best performer in 2009 and 2010.

The SEC has been moving to bring its regulations in line with global best practices, as part of a Government plan to give greater confidence to foreign investors.

“I don’t think anybody will tell us to stop investigations. I don’t think that will happen,” Sugathadasa told Reuters at a weekend investor exhibition in Colombo.

Share prices in Sri Lanka have often been driven up when smaller investors flock to buy previously illiquid companies on rumours that big investors are getting in, and then get hurt when the prices collapse.

Referring to inquiries the SEC started that involve some influential investors, Sugathadasa said: “We are still finding facts and discussing with them.”

She added “If we think it needs to be investigated, then that’s the last stage.”

In the past, politically-connected investors have been able to get investigations halted through pressure on SEC officials.

“They might want us to not to regulate. Then there is no point of having a regulator and the Government can close the regulator. But I don’t think the present Government wants to do that,” Sugathadasa said.

Brokers, whose commissions grow with volumes, say increased regulation, in particular restrictions on credit, has hurt liquidity and caused a recent slide.

Sri Lanka’s share market had until this year been on a constant upward trajectory since January 2009, when it began to rise in anticipation of the end, which came in May that year, of a three-decade civil war.

The Colombo exchange gained 125 per cent in 2009 and 96 per cent in 2010. As of Monday, it was down 3.2 per cent in 2011.