Shady Deals

April 15, 2008 (LBO) – Sri Lanka’s stock markets regulator is
investigating a number of cases of manipulation of the share market on
the Colombo Stock Exchange, a senior state counsel has revealed. Buwaneka Aluwihare, deputy solicitor general of the Attorney-General’s
Department, said that the offences in some of the cases were being
compounded with the guilty paying a fine, while others were being
prosecuted under the Securities and Exchange Commission (SEC) Act.

Under Section 51 (3) of the SEC Act, a director, manager, secretary or
other similar officer of the body corporate shall be deemed liable of
an offence unless they can prove the offence was committed without his
knowledge or connivance or that he tried to prevent it, Aluwihare
said.

“You have tp be careful of the actions of your colleagues in the board
room – you too are deemed liable,” he told a seminar on stock market
offences organised by the SEC last week.

The SEC had recently investigated and compounded the offence in a case
of market manipulation – creating a false or misleading impression of
active trading of shares.

This was an example of a ‘wash sale’ where the regulation prohibits
trades that d