Starting Fresh

By Ravi Abeysuriya, CFA

Jan 04, 2013 (LBO) – When it comes to investing in the stock market in Sri Lanka nowadays the chorus that has regrettably echoed has been Market manipulation and State owned Funds losing Billions of money by investing in the stock market. Market manipulation or creating a False Market’ or one of its more locally familiar tributaries ˜pump and dump’ has a long, eventful and storied history. From the Tulip Mania of the 1600s all the way to the recent US housing bubble that precipitated the global financial crisis, market manipulators have employed all-and-sundry tactics to skim the wallets of gullible investors.

Manipulated markets have come in all domains and dimensions. The Erie War of 1867 where Jay Gould a director of Erie Railroad Company converted debentures illegally and then bribed the legislators to make the conversion legal is one historical example.

The CEO of Enron, Jeff Skilling, who made use of accounting loopholes and misappropriated investments to keep billions in debt off the books and then coercing the reputed Accounting Firm, Arthur Anderson to play along, in addition to the great internet swindle where two UCLA students in 1999 drove the stock of a bankrupt printing company from 13 US cents to more tha