Securities Fraud

May 31, 2012 (LBO) - Sri Lanka’s central bank should strip National Savings Bank’s directors off their posts, and prevent them from serving on boards in the future, after an attempt buy stock at an inflated price, a former securities regulator said. As pressure mounted from the regulators, the media and opposition legislators led by Harsha de Silva, NSB’s chairman, Pradeep Kariyawasam and a working director, astrologer Sumanadasa Abeygunawardena quit this month.

The SEC suspended Dinal Wijemanne, the chief executive of Taprobane Securities Limited, who acted on behalf of the buyers and sellers. Wijemanne, who was among the key sellers, was also an alternate director on The Finance Company (TFC) board.

"Directors of Taprobane clearly acted in a conflict of interest, said Wikramanayake who is a partner at the law firm, Nithya Partners.

Some of them (Taprobane Securities) held position of TFC. They (Taprobane directors) are not fit and proper to hold position in financial services companies, Wikramanayake said.

Prosecuting will take time, so they should be stripped off their position, he said.

Wikramanayake commended the SEC for its flurry of recent directives to restore market confidence.

The regulator r