Last Updated : 27-08-2014 19:54


SEC summons Taprobane directors over TFC - NSB deal

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The Securities and Exchange Commission (SEC) will be meeting the Board of Directors of Taprobane Securities today in connection to the contentious The Finance-national Savings Bank deal, a SEC top official said.

“We have summoned the director board of Taprobane Securities, the brokerage involved in this deal for discussions. Last Friday we summoned Taprobane CEO/ Director Dinal Wijemanne for clarifications,” SEC Chairman Tilak Karunaratne told Mirror Business.

He also said that the SEC has ordered Wijemanne to provide all his explanations in writing by this Friday.

“We’ve told him to submit his explanations in writing by May 8. However, he had asked for time till this Friday,” he said.

According to Karunaratne, being the broker for both the buyer and seller, Taprobane cannot avoid its responsibility towards the completion of this transaction.

As he pointed out, this is the first default that has taken place in the history of the Colombo Stock Exchange. “They (Taprobane) were the brokers for the buyer as well. When the buyer does not pay, the broker should try to talk to the buyer and make sure the payment is done on time. This default has set a very negative example and it has created a systemic risk for the market.”

“And also, the issue has become more complex with one of the major selling parties being the broker as well as a non-executive director of the company of which he sold shares. So, there is an obvious case of conflict of interest,” the SEC Chairman said.

He also confirmed that the SEC is also currently investigating into any possible incidents of ‘insider dealing’ related to the TFC-NSB deal and said that the SEC officials last Friday visited the premises of Taprobane Securities and took into possession several documents and data that might be useful in the investigation process.

When asked about the actions that can be taken against Taprobane, Karunaratne said that if there is proof of malpractice, the penalty can range from a temporary ban to the revocation of brokering license.

He also noted that as the regulator, the SEC will be doing its maximum to discover had there been any wrongdoing with regard to this deal, and said the SEC has also drawn the attention of the Central Bank on the matter.

However, on Tuesday, Central Bank Governor Ajith Nivard Cabraal said that as the banking regulator, it has no role to play in the transaction.

Cabraal told the media that the banking regulator in a broad sense generally defines the parameters within which banks can engage in equity investments, and said that thereafter it is "their business."

On April 27, National Savings Bank (NSB) purchased a 13 percent stake in TFC for Rs.390 million, paying Rs.50 each share. The main sellers were Dinal Wijemanne, Rayynor Silva, Yogananda Perera and Nandadeva Perera. On the day of the trade, the TFC share opened at Rs.30, and during the month of April, the TFC share had been trading between Rs.30-32.50.

However, following the deal, Finance Ministry Secretary P.B. Jayasundara directed NSB to hold payment on the grounds of the premium price NSB had agreed to pay for the shares. Meanwhile, President Mahinda Rajapaksa has ordered an investigation into the matter.



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-0+1 # sm 2012-05-10 23:45
Can somebody explain what is the position of a settlement bank in this type of default ?
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Another successful  surgery
Fifth Comoran Strike exercise in EP
Rectify our salary anomalies
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Another successful  surgery
Fifth Comoran Strike exercise in EP
Rectify our salary anomalies
Chinese beauties here