Was the SEC director general fired due to incompetence?

1320463022000 » Tagged as: cse , Price Band , sec , WAPO

The director general of the Securities Exchange Commision of Sri Lanka was fired on the second of November. The market cheered the move with both indices gaining as much as 3.5% intraday.  In actual fact, Malik Cader was not fired but kicked upstairs (given a more senior post at the finance ministry).  Sri Lanka's rediculous labour laws makes it well nigh impossible to fire anyone. If you don't agree ask the directors of listed Seylan Bank which paid out  750 million to 250 employees to  'voluntarily retire'


Many people thought some powerfull manipulators against whom the SEC had attempted to take action against had pulled some strings to get the DG dismissed.  However my belief is that this is the exact opposite of the truth. The powers that be had enough of the bungling and inaction at the SEC. Between 2008 and 2011 the SEC did not take any action against manipulators at all. When they did finally wake up all they did was impose a small fine on one gang and send a warning letter to several brokers suspected to be involved in manipulations. The government probably felt that it was too little too late and thought fit to ring in the changes before foreign investor completely lost faith in the CSE (well at least the few that still remain).


It was during the reign of the present director general and chairperson that the controversial price band system was introduced.  It's a scheme where by shares displaying unusual price movements are forced to trade with +/- 10% of the previous days close. Almost all such wild price swings  are caused by manipulations, yet the SEC failed to take action against any of these manipulations even though the price band was imposed nearly a 100 times during the year.


But the price band never caught the play on WAPO a blatant manipulation that any newbie to the market would have spotted.  There are many other instances where daylight robbery has been carried out at the CSE while the SEC turned a blind eye. This include the sell off of ASHO, the DPL shooting towards the stars after announcing that they were on the verge of bankruptcy. Outrageously priced private placement such as DPL . Non submission of annual reports for years and years (HDEV, MIRA)


Thus it seems safe to assume that the government fed up with the incompetence of the SEC decided that a more competent DG should be appointed before the countries image is further damaged.


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