Many of the investors in the Sri Lankan stock market trade in shares based on inside information but regulators are scared to take these offenders to task, the newspaper quoted stockbrokers as saying.
They were reacting to the announcement that billionaire Galleon hedge fund manager, Raj Rajaratnam was found guilty by a US court for insider trading. Rajaratnam, who faces a lengthy prison term, is to appeal against the verdict.
The newspaper said that in Sri Lanka stock market offenders are not prosecuted and jailed and top businessmen and investors caught breaking the law can get off by 'compounding' their offence and paying a fine with no admission of guilt.
"The Securities & Exchange Commission (SEC) law needs more teeth,” it quoted as stockbroker as saying.
The paper quoted Channa de Silva, a former Director-General of the SEC and chief executive of LR Global Lanka Asset Management Co as suggesting the need for an institutional framework to allow whistle-blowing.
“The law needs to be strong and be a deterrent to this kind of activity,” de Silva told the newspaper, adding that Rajaratnam’s conviction is a lesson for regulatory and exchange authorities, and the investor.
The Sunday Times also quoted J C Weliamuna, former Transparency International Sri Lanka Executive Director, as saying in most cases there was a pattern in insider trading.
“In the US, the regulator means business while in Sri Lanka all officials or appointees to regulatory bodies are directly or indirectly related to business," Weliamuna said.
"In such a situation they don’t want to stop insider trading as they are dealing with friends, colleagues and politicians.”
The media is also under pressure from the corporate community to suppress bad news about companies, the Sunday Times also said in a separate comment.
"Big advertisers regularly using the tool of advertising to either hide the facts pertaining to their companies - despite proclamations of governance, transparency and accountability in their annual reports – and threaten to pull out advertising if the media runs stories adverse to their company," it said.
"Like all newspapers, we too learnt the bitter lesson that even Supreme Court judgments against corporate Sri Lanka is too ‘sacrosanct’ to be commented on, if it's not in favour of corporate bosses!"