SEC ramping up amendments to proposed laws
The Securities and Exchange Commission (SEC) in a bid to keep up with other capital markets has appointed an expert panel to re-do the proposed amendments to the SEC Act, officials said.
While the proposed new legislation which would ensure violators of stock market rules are slapped huge fines or ordered to return profits from ‘dirty’ deals is close to being finalized, most amendments to the SEC Act that were sdrafted earlier and were awaiting parliamentary sanction will be incorporated, they added. Recently, SEC Chairman Thilak Karunaratne was quoted in media as saying that the SEC is planning in bringing fresh laws mandating auditors to bring any financial irregularities to the SEC.
The official said that this will be made law in the new amendments and that the expert panel is studying similar laws that are adopted in countries such as Malaysia and the US.
In the earlier finalized draft SEC Act, the focus was on bringing in civil sanctions (as opposed to the criminal sanctions in force now) to ensure ‘restitution’ of investors. “It’ll be in this Act as well. We identified offenders and there will be certain provisions to charge thrice the profit or the loss by the act of market manipulation from the offenders and pay one third of it to the investors who made a loss through this. This is called ‘disgorgement’,” the official said.
He explained that in other countries, those who breach (SEC) regulations are typically required to pay both civil money penalties and disgorgement. Civil money penalties are punitive, while disgorgement is about paying back profits made from those deals that violated the SEC’s regulations.
In another development, the Criminal Investigation Department (CID) last week summoned a few more SEC officials and also two former SEC commissioners to record statements on the Rs. 5 million ‘grant’ by the regulator to the Tharunyata Hetak Fund headed by parliamentarian Namal Rajapaksa, some two years ago.