Insider trading regulations kill market: Top investor

By Quintus Perera

Colombo’s stock market, plagued with various issues in recent months, was plunged into further controversy this week when a top investor threatened to pull out if the regulator stuck to the rules pertaining to insider trading.

Vallibel One Ltd Deputy Chairman Nimal Perera, who is a director of a string of companies, told a panel discussion on insider trading in Colombo that the market here operated almost entirely on insider dealings.

“Regulations and monitoring insider dealings can kill the market. “If I receive a letter from the Securities and Exchange Commission (SEC) on account of insider dealings, I would be reluctant to go before it and make a statement. Rather than being embarrassed I might as well pull out of the market,” he said in what was seen as a veiled threat to the SEC.

Insider trading is a serious violation under the SEC Act but investors like Mr. Perera say that these regulations are too stringent and can kill the market which they claim largely operate on such information.

Mr.Perera is a long-time investment advisor to Dhammika Perera, who is currently Secretary to the Ministry of Transport in addition to being a powerful investor and businessman.

The duo made their entry into the market some years ago and controlled many listed companies through unconventional ways. Recently Dhammika Perera took control of Hayleys. Addressing the panel discussion organised by the Sri Lanka Institute of Directors, Mr. Perera said there were many hypocrites in the market and warned that if investors like him pulled out of the market, it would just collapse.

SEC Director-General Malik Cader and its former chief Arittha Wickramanayake, who moderated the discussion, said rules and regulations were necessary to protect investors and ensure a level-playing field. Mr. Perera’s controversial call to relax insider trading rules to protect ‘some’ big-time market investors drew a caustic comment from K.C. Vignarajah, a former Chairman of the Ceylon National Chamber of Commerce and a prominent investor who fights for the rights of small shareholders. He said, “this is like setting a thief to catch a thief”. “The proceedings of this discussion were such that you don’t need an identification parade to find out the culprits because some are bold and open about what they do irrespective of the law,” Mr. Vignarajah told the Sunday Times.

Other panelists were Nations Lanka Finance Director Asanga Seneviratna and JB Securities (Pvt) Ltd Managing Director Murtaza Jafferjee. Mr. Seneviratne agreed with some of the views expressed by Mr. Perera.

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