SEC says looking into unusual price movement of NIFL share

„Says trading patterns and behaviours of investors currently being analysed „NIFL share closed at Rs.694.75 yesterday, up by Rs.76 or 12.28%

The Securities and Exchange Commission (SEC) yesterday confirmed that it had begun looking into the recent unusual price movement of the shares of LOLC Development Finance PLC (NIFL), amid allegations of market malpractice.

NIFL, with a public free float of just 0.11 percent, gained over 25 percent for seven consecutive days, completely dumbfounding investors, stockbrokers and market analysts alike.

The share closed at Rs.694.75 yesterday, up Rs.76 or 12.28 percent from the previous close, before hitting an intra-day high of Rs.773.25.

The management of NIFL had said that there was no pricesensitive information withheld by them, which may have caused this unusual trading of the securities of the company.

“The SEC has observed the unusual price movement of this share and has already called for information from the CSE and is evaluating the manner in which transactions have taken place. We are analysing the trading patterns and behaviour of investors,” SEC Spokesperson and Director External Relations and Capital Market Education/ Media Tushara Jayaratne said, responding to a Mirror Business inquiry.

“We have also observed in some social media platforms that this share has been promoted. Therefore, we are presently trying to find out as to who has been involved in this process. If we find any market malpractice, we will take stern action against those who have been involved,” he added.

With the gains of last couple of weeks, NIFL has breached into the list of top 10 market cap companies and eclipsed the country’s largest private bank Commercial Bank of Ceylon PLC to become the fourth largest market cap company on the CSE.

If a company with such minimal public free float can have such an outsized impact on the main stock index, some market analysts have proposed to revisit the index calculation process, using freeload adjusted market cap weights, which is done with S&P Dow Jones and by both Bombay Stock Exchange and National Stock Exchange of India.

Despite its bloated share price, NIFL had net assets per share of Rs.11.82 as at March 31, 2021 and an earnings per share of 65 cents for FY21.