In spite of the commendation the Securities and Exchange Commission (SEC) Chief Tilak Karunaratne received from the Committee of Public Enterprises (COPE) last week for ‘excellent performance’, the regulator is believed to be under extreme pressure, which may eventually lead to his stepping down, Mirror Business reliably learns.
According to sources close to SEC, the pressure is mounting on Karunaratne, who has taken a tough regulatory stance against market misconduct and revived investigations which were in the backburner since he assumed duties as the SEC Chairman.
“He is extremely frustrated as there is little help from those who are supposed to back him in doing the right thing. It also seems that the decision was prompted by his unwillingness to cause difficulties to those who appointed him to this high office,” a SEC source on the grounds of anonymity said.
According to him, Karunaratne is most likely to handover his resignation during the early part of this week and, the resignation letter, in detail, will explain the reasons for his decision to quit SEC.
Certain high net worth investors and some stockbrokers have taken arms against the SEC, specially against Karunaratne, alleging that their regulatory actions have created a ‘fear psychosis’ among investors which has kept both big and small investors away from the Colombo Stock Exchange (CSE) alike.
Though these influential investors were able to arrange a meeting with the President, who is also the Finance Minster and the market stakeholders including the SEC a few weeks back, it bore no material outcome, except a couple of follow-up meetings between the market stakeholders and the Treasury Secretary P.B.Jayasundara.
“During any of these meetings, the SEC was neither ready to bring the investigations it was carrying out to a halt nor alter its position on broker-credit. This has agitated many stock brokers and influential investors who are highly connected,” a stockbroker who attended these meeting said.
Relaxation of credit rules has been a sticking point between the brokers and the SEC as some stockbrokers wanted fewer regulations on credit they provide to their clients, though certain brokers stressing extensive credit may lead to systemic risks.
“With the SEC trying to take actions against market misconduct, sanity returned to the Colombo bourse together with foreign investors. To-date, foreign inflow to the market has topped Rs.26 billion. A change in the top position of the regulator can certainly unsettle this trend,” an independent market analyst told Mirror Business.
Bowing down to pressure exerted by powerful investors during December last year, the then SEC Chairman Indrani Sugathadasa resigned from her post claiming it was to ‘uphold her principles’.
“It will be worrying to see the same fate befalling on the person who succeeded Sugathadasa, who also tried taking correct measures for market development. This clearly shows that how powerful the big investors who operate in the bourse are,” a senior economist who preferred anonymity said.
“In recent news reports, it was reported quoting COPE Chairman D.E.W.Gunesekara that COPE would support SEC to the hilt. This would be a good time for them to step up and protect the independence of the SEC,” he added.
Meanwhile, following the likely resignation of Karunaratne, the fate of the acting Director General of SEC, Dr.Harendra Dissa Bandara also hangs in the balance, sources said.
According to them, Karunaratne’s attempt to make Dissa Bandara the SEC Director General has so far failed and this also has contributed towards Karunaratne’s decision to step down.
As per the sources, Dissa Bandara is likely to be removed from his position following Karunaratne’s resignation.
Those tipped to be the new Director General are present Director Investigations at the SEC, Dhammika Perea and Sri Lanka Tourism Development Chairman Nalaka Godahewa. (IS)
Mr. Karunaratne, Gone were the days when all valued honesty as the best policy. It is no more. Sorry.
Cyclops Monday, 13 August 2012 04:50 AM
Honesty is the best policy is old hat- ask any politician!!!
simple mind Monday, 13 August 2012 04:59 AM
Another one bites the dust. Way to go SL
Prof Hemantha Wickra Monday, 13 August 2012 05:17 AM
Honest people have to resign in fear of rogues, what a state?
Raaja passa Monday, 13 August 2012 05:27 AM
Sri Lanka is a fail state. No matter who says what
Nadeesha Monday, 13 August 2012 05:40 AM
Vanniala aththo also forced to quit. New form of transformation!!!
Fazli Monday, 13 August 2012 05:26 AM
How dreadful ? Intimidation is the order of the day ! So many intelects are simply helpless because of Underworld Mafia ! We keep dreaming to become a wonder of asia !
Nodrog Monday, 13 August 2012 06:33 AM
Nice going SEC. Good way to build up investors confidence.
willows Monday, 13 August 2012 07:39 AM
what apathetic country we live in
farieze Monday, 13 August 2012 08:19 AM
need tough and clean man- appoint rumi muzammil
Fusion Monday, 13 August 2012 09:42 AM
One reason for the US financial collapse was poor regulation, lack of accountability, etc. If you allow financial institutions to reign free then things will get really, really ugly.
richardsonardskirti@ Monday, 13 August 2012 09:58 AM
In Sri Lanka ... Good guys finish last ..........
upul Monday, 13 August 2012 10:32 AM
If he could not understand this government still after working so close and together for a long time , his intelligence is in doubt ?
silva Monday, 13 August 2012 02:58 PM
Obviously the ' stock market mafia 'is more powerful than him.
leon Monday, 13 August 2012 05:10 PM
Lost paradise. This is not a era for gentelmens. Only for currupted politicians. This will be the fate for all government institutions. Finally economy will crash, worst than Grease. All who think right please leave this lost paradise as soon as possible.
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