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IMF concerned over resignation of SEC head

20 August 2012 11:17 am - 12     - {{hitsCtrl.values.hits}}

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The International Monetary Fund today raised concerns over the resignation of the head of the Securities and Exchange Commission, observing that the regulator had been taking the right steps to ensure market participants obeyed the rules.

SEC head Tilak Karunaratne resigned on Friday, saying he had come under pressure from stock market players under investigation for stock manipulation making false allegations against him.

His resignation was the second in less than nine months after his predecessor left amid complaints from brokers that tougher regulations were hurting stock prices.

"It is sad to see the SEC lose yet another strong chairperson, and in such a short period too," Koshy Mathai, Sri Lanka's IMF resident representative, told Reuters in response to an e-mail query on the resignation of Karunaratne.

The SEC chief had been pushing investigations into stock market malpractice, including so-called pump-and-dump deals in which investors are lured into apparently cut-price equities.

"From all credible accounts, Karunaratne and his team were taking exactly the right steps to ensure that stock market participants obey the rules."

The global lender completed the disbursement of a $2.6 billion loan last month and said it was under preliminary discussions with Sri Lankan authorities for an extended fund facility.

Brokers said some market players had complained about Karunaratne to President Mahinda Rajapaksa that the former regulatory chief had over regulated the market and intimidated some key investors by sending strong summon letters for investigations.

"In any country, it is only with a firm set of regulations and an active regulator to enforce them that foreign and domestic investors will have confidence that the stock market is indeed a level playing field for all and not just designed for the benefit of a select few," Mathai said.

"This is an important issue for Sri Lanka, as development of the capital markets is a key priority in ensuring the country's continued rapid growth."
Sri Lanka's stock market has fallen more than 20 percent since the start of the year.

The Finance Ministry has yet to appoint a regulatory head, but SEC sources said it would be meaningless to expect a new SEC chief to promote the market under the influence of a group of manipulating individuals instead of regulating it.

Analysts and stock brokers are highly divided over Karunaratne's resignation with some noting regulation will be difficult to enforce even under a new SEC chief as investors are powerful enough to lobby against any probes.  (Source: Reuters)
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  Comments - 12

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  • anura Tuesday, 21 August 2012 06:54 AM

    So why beg and pawn the future and the country and future of Us? It is not you or me who pawned. It is our present ruler s blunders but we cannot be treated like guinea pigs because we r a souriegn country and its people. It is in our blood to defend our country if the need arises no matter what.

    Aiyo Sarath Tuesday, 21 August 2012 07:15 AM

    Next appointment would be SF..

    EM Monday, 20 August 2012 07:21 PM

    I think Aruna you are not in this world! when we wont a loan IMF is good. when they criticize we don't like. but realize the world is watching us !!

    bandara Tuesday, 21 August 2012 04:14 AM

    as long as you expect IMF and others to bail out your fiscal deficit, they have every right to interfere.

    Nodrog Monday, 20 August 2012 11:34 AM

    TK did the right thing by keeping his integrity intact and resigning rather than stay on as a yes-man and allow the crooks to manipulate the stock market.

    siri lankan Tuesday, 21 August 2012 04:22 AM

    Problem is that 'owl' security function only at night. This is day light robbery.

    roger Monday, 20 August 2012 11:42 AM

    Well as one of the worlds most highly responsible institutions it's too late to be worried, should have picked it up few years ago fiscal position in SL was and is in bad shape. SEC alone run the country its the Central Bank and its figures you should have eyed on

    Kautilya Tuesday, 21 August 2012 04:28 AM

    In Sri Lanka only the crooks are getting the government blessing. IMF should toe the line.

    Dee Tuesday, 21 August 2012 05:03 AM

    Hey! why dont they come up with 'private placement' for the SEC?

    Dalu Banda Monday, 20 August 2012 12:51 PM

    My question is when the Crooks are every ware, why should we have a man with integrity only for this post.

    anura Monday, 20 August 2012 02:55 PM

    since when did Sri Lanka loose souriegnity to IMF? IMF has no right to question our internal matters. There are many bigger concerns than this in the world if they need to raise concern. Sri Lankans are very good to buy into foriegn forces and ruin our own in the process. Stock market is just one example.

    Nero Monday, 20 August 2012 03:08 PM

    Do not worry, keep lending and we the tax payer will keep you on the payroll.


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