The capital market regulator, Securities and Exchange Commission (SEC) has re-opened 11 cases involving market manipulation, which were closed for two to three years ago, a top SEC official said.
The re-rated Colombo bourse saw a boom soon after the war victory with renewed investor confidence and new money flowing into the market. However, along with that allegations of pump and dump of stocks also rocked the market. This led to a market crash and many novice investors who knew little about securities trading and investment lost their hard earned money at the hands of a few, who were alleged to have played out the market. As a result, the small retail investors have largely stayed away from the country’s stock market, which portrays only a fraction of the economy.Despite repeated assurances by the SEC that these pump and dump cases are being investigated, no one has to-date been prosecuted for securities fraud.
According to Tushara Jayaratne, Director External Relations and Surveillance at the SEC, they had to re-open these cases which were completed a few years ago. But no reason was given as to why these cases have been re-opened.
“Some of those investigations which we completed two to three years back have been reopened once again. There are 11 reopened cases right now,” Jayaratne told a forum in Colombo yesterday.
Meanwhile, some cases have been referred to the Attorney General’s Department.
“Some of those have gone to the AG’s department and some are completed,” he added. However, Jayaratne said he could not comment on ongoing investigations, and once completed those would be published in the SEC website as to what actions had been taken.
“Investigations take time. Even the US market regulator, who is considered the best, took about three years to complete their investigation on Raj Rajaratnam and to prosecute him,” Jayaratne added.