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