During a stock market bubble in 2010 foreigners sold out. In 2012 foreign investors have bought 28.2 billion rupees of stocks after prices fell.

"There are foreigners, foreigners and foreigners," Jayaweera, from Divasa Equity, a leveraged investment vehicle, which had bought into among other investments a hotel told reporters at a news briefing.

Jayaweera said some of the foreign investors were 'kalu suddas' (black, white men) who were actually Sri Lankan businessmen that had money abroad. Others included investment funds and those buying on their own account.

Jayaweera said perceptions that the stock market is "full of crooks" was not fair and it was hurting foreign investment.

He said a foreign investor who wanted to take Colombo Land, a property firm to the 'next level' had cancelled a meeting after doing google search where reports painted him to be a part of a 'stock market mafia' in Sri Lanka.

Jayaweera shot to prominence partly due to his controversial presentation. He however denied that his presentation was intended to question the rights of citizens or the media to dissent in a free society.

The Colombo Brokers Association - from which several brokers had dropped out - and other investors also met the president.

The Securities and Exchange Commission which brought trading curbs and credit restrictions to restrain the bubble was blamed for bringing the market down.

Sri Lanka's SEC chief Tilak Karunaratne resigned last week saying he was under pressure to stop probes of 17 cases relating to securities fraud.

His resignation, along with the resignation of the previous SEC boss, Indrani Sugathadasa following a previous meeting between the Colombo Brokers Association and the President was seen as a reflection of the political clout wielded by the so-called 'stock market mafia' that engaged in 'pump and dump' scams.

Until the press conference some sections of the media referred to Jayaweera as a high net worth investor and a connection was made to the investment companies gave a face to.

The connection of the investments to Triad Advertising, a top Sri Lankan ad agency that he founded with a friend, was not clear.

Jayaweera said Triad Advertising was a clean company which did not use political influence of bribes and to his knowledge only a 3,000 rupee payment was once made to a wharf clerk to clear a camera from the airport.

Other than legitimate commissions received from placing advertising in the media the firm also got no commissions.

Jayaweera said most investments were made by Divasa Equity, which was part of the group.

He said Divasa Equity was financed with a combination of long term loans and margin facilities and had invested about 1.2 billion rupees in stocks.

Leveraged investment vehicles are among the riskiest financial engineering strategies ever devised to invest in any stock in any market anywhere in the world.

Jayaweera said there was no problem in servicing the interest on the loans and if needed other companies in the group connected to Triad Advertising could help service them.

Triad had first made small investments in stocks. Then he had got involved and built a portfolio of 25 million rupees and which had increased to 50 million.

Later a separate company had been incorporated, which had used leveraging to buy stocks. He had invested in stocks for about two and a half years.

"Then along with that we wanted to do new things. We thought we could be active partner a player in this economy," Jayaweera said.

"We kept investing, we acquired Reefcomber (a hotel).'

Jayaweera said the firm had bought into a hotel re-branded it Citrus and made a 32 roomed 'dilapidated' into a 92 roomed refurbished one.

"We acquired a property in Waskaduwa with almost one kilometer of beach stretch. We bought a land in Kalpitiya. We got all the approval about a month ago."

He said in the case of HVA Foods, a strategic investment had to be sold due to a margin call.

Jayaweera said stocks rose because a 30-year war ended the suppression of the economy.

But analysts say especially in 2010 illiquid stocks with weak fundamentals were easily pumped up when Sri Lanka's interest rates were low, money markets had excess liquidity and margin loans were easy to come by.

Credit bubbles and stock market bubbles go hand in hand.

The world's first SEC in the US was also created following market malpractices that occurred during a stock market bubble in the late 1920s, which was fired by Federal Reserve money printing.

After interest rates were hiked by the Fed stock prices collapsed and the world plunged into the Great Depression. The Federal Reserve then brought the 'Regulation T' which limited margin loans to 50 percent.

In Sri Lanka as money tightened, the credit bubble ran out of steam, ultimately triggering a fairly typical emerging market style balance of payments crisis that countries with pegged exchange rates often run into.

Interest rates have since risen. Retailers and other investors who bought stocks at inflated prices have had to face losses.

"We never realized till obviously maybe seven months ago that there is zero security for our investments in this kind of situation," Jayaweera said.