Stock Market must be freed from investor malpractice - Tilak Karunaratne

by Lalin FERNANDOPULLE

The Colombo Stock Market must be freed from undue influence and manipulations to woo investors which is essential for market growth, a top market analyst said.

He said that all pump and dump deals must be probed and measures should be taken to put an end to such transactions to ensure a healthy market for all investors. The Chairman of Sri Lanka's Securities and Exchange Commission (SEC) Tilak Karunaratne who tendered his resignation on Friday said that he decided to resign due to the immense pressure from investors whose transactions are being probed for securities fraud.

Karunaratne told the media that some brokers and investors had become so powerful as to influence his resignation. The SEC has been probing 'pump and dump' deals where weak stocks were driven up and sold to small investors during a stock market bubble fired by lower interest rates and liquidity from margin loans.

Karunaratne earlier in the week said that investors exerted pressure on him to resign due to his decision to continue with investigations on fraudulent transactions. His predecessor, Indrani Sugathadasa, also resigned late last year, amid pressure from some brokers and high net worth investors.

Past President of the Federation of Chambers of Commerce and Industry of Sri Lanka, Nawaz Rajabdeen said that the private sector is loosing confidence in the stock market as a result of not following regulations. The authorities should investigate and book all the big time players for insider trading without any political interference, this will resurrect and build the confidence of small time investors who are frustrated. Political interference in the public sector will end in disaster as we have seen in the past.

"It is sad that within one year, two heads of the Commission have changed and this will definitely send wrong signals to foreign direct investors.

Many small time investors have suffered and lost interest in the stock market, while the mafias are living in the shadow of powerful protectors", Rajabdeen said.

Head of National Portfolio Development Sri Lanka and the Maldives UNOPS, Rohantha Athukorala said "Even though the Stock Exchange reflects around twenty percent of the economy, the fact, of the matter is that it is the key vibe on the Brand 'Sri Lanka'.

What is needed is strong policy and implementation to ensure a vibrant market.

The Ceylon Chamber of Commerce in a communique stated that the Chamber was concerned over the resignation of the chief of SEC which is the regulator of the Colombo Stock Exchange.