Former CB officials on the block after SEC move

The recent trading suspension of key managers in stockbroking by the stock market regulator for share price manipulation of Ceylon Grain Elevators PLC (CGE) will put former central bankers (CB) in trouble, industry analysts say.

The Securities and Exchange Commission (SEC) issued directives suspending Sriyan Gurusinghe and Dinal Wijemanne who were trading at Ceylinco Stockbrokers (Pvt) Ltd and Taprobane Securities (Pvt) respectively, from the industry for selling shares of

Ceylon Grain Elevators PLC for the three months from December 2010 to March 2011 to the CB-managed Employees Provident Fund (EPF).

The seller of these shares was companies connected to Perpetual Treasuries owned by Arjun Aloysius.

Sources said that with the high likelihood of this case going to court, the EPF fund managers and top management of the CB at the time will be answerable.

The Presidential Commission of Inquiry (PCOI) report in 2018 which dealt with the largest securities fraud relating to swindled bond auctions in 2015 and 2016 draws the connection between Ceylon Grain Elevators where EPF made heavy losses.

It showed that 91 per cent out of the total investment of Rs 1,051million amounting to Rs 965 million in shares of this company was made through “crossing” transactions on March 4, 2011, and March 15, 2011 and that most were sold to Perpetual Capital Pvt Ltd (PCPL). Perpetual Asset Management (Pvt) Ltd, and Perpetual Capital (Pvt) Ltd, were companies that were active in the stock market before 2012, according to evidence given by Perpetual Treasuries CEO Kasun Palisena. These transactions were not in the EPF’s Investment Committee (IC) weekly plan and were subsequently ratified.

The EPF incurred an impairment loss of Rs 651.91 million on the investment in CGE and earned a dividend of Rs 25.02 million. From the start of this year, the SEC has been going after market manipulators and concluding cases which were started in 2011.

SEC also issued a warning to Vidullanka PLC to have a standard inhouse mechanism to govern the trades of directors who are privy to price sensitive corporate announcements that are to be made on the Colombo Stock Exchange, to ensure the compliance with Rule 7.8 of the Listing Rules.