SEC to take strict action over abnormal share price movements on January 7

The Securities and Exchange Commission of Sri Lanka (SEC) says it has identified individuals primarily responsible for the abnormal share price movements reported on January 7, while noting that additional parties may also be involved.

Speaking on the matter, SEC Officer in Charge and Deputy Director General Tushara Jayaratne said several individuals have already been summoned and questioned, while records have been reviewed as part of a comprehensive investigation.

He said the Colombo Stock Exchange (CSE) took immediate corrective action following the incident, including the introduction of a new safeguard effective January 8, whereby investors are no longer permitted to place market orders on a security’s first day of trading.

“This measure will not negatively affect price discovery on the first day of trading,” Jayaratne stressed.

Despite the new restriction, the SEC observed that a small number of investors attempted to place sell orders at excessively high prices on January 8. These investors were identified and warned, while the orders were not executed due to the new controls in place. He noted that the vast majority of investors acted responsibly.

According to Jayaratne, most of the individuals identified are retail investors who used internet trading platforms without consulting licensed investment advisors attached to brokerage firms. He added that these actions were deliberate and not the result of misunderstanding.

“These are our initial findings. There may be connected parties and the investigation will reveal the complete picture. It is a comprehensive and time-consuming process, but we have instructed our team to conclude it as soon as possible,” he said.

He further warned that strict action will be taken under the Securities and Exchange Commission Act if the investigation confirms market manipulation or any contribution to the incident.

Source: Adaderana