SEC-CSE: Regulators on a royal ride
The integrity of leading capital market institutions is under scrutiny due to misleading information provided by two of their top officials concerning their familial relationship, raising serious alarms about ethical standards and transparency.
It was revealed by certain whistleblowers, that Vindya Jayasekera who is designated as the new Chief Executive Officer (CEO) of the Colombo Stock Exchange (CSE) is a first cousin of Chinthaka Mendis, the Director General of the Securities and Exchange Commission (SEC) which was not disclosed during the CEO appointment process, raising questions about the integrity of both positions, with the SEC commissioners compelled to refer the matter to the Attorney General’s Department for an opinion regarding the implications of the undisclosed relationship and the potential conflict of interest. Those familiar with the matter said that when it was initially mooted, it was indicated that they were distant relations and not closely connected.
While some view the non-disclosure as an oversight, the sensitivity of the issue accentuates the importance of transparency in regulatory roles. For instance, before Ms. Jayasekera was appointed, the market regulator reprimanded the CSE over a regulatory issue. Analysts point out that had it been the case if she was appointed with the Director General of SEC being her cousin, such direction by the regulator may not have been potentially possible, as there might not be objectivity.
Those familiar with the onboarding procedures say that Ms. Jayasekera, who is technically competent in the subject matter and has a strong background in the capital markets, was onboarded as the CEO designate after the fit and proper criteria were approved by the SEC. However, some point out that this relationship was public as it was in the social media domain, and anyone could have verified this. Wrongful disclosures, according to the law, are a punishable offence.
She was chosen after going through 14 applications, it was revealed. Mr. Mendis, equally qualified as his cousin, was appointed Director of Investigations in 2013 at the SEC under the then Chair, Nalaka Godahewa.
Analysts pointed out that the conflict-of-interest issue has quickly scaled onto an integrity matter and finally exploded into a legal issue. It was also revealed that whistleblowers are armed with several more information connected to this matter, and would be putting it out at the right time.
The implications of such ambiguous conduct could undermine public trust and confidence in the capital market’s governance and operations, they added.
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