Broking community is at a dilemma as to how shares of certain companies suddenly go up and after a few days fall back. The Chairperson of Sri Lanka’s Securities and Exchange Commission Indrani Sugathadasa herself had said during the past month about 10 to 15 stock went up sharply, some by about 300 percent and for whatever reason they suddenly fell. She had said “We should find why this happens? Small investors should be aware why they go up and why fall down suddenly.”
Rumours were also rife in the community that the Director General of Sri Lanka’s Securities and Exchange Commission Malik Cader would be sacked or would be made to resign.
There had been sudden and unusual price hikes of shares of certain companies and Mr. Cader had started to crack the whip on widespread micro cap fraud and insider dealing. According to sources the attempts to remove the SEC began after a probe into yet another sharp rise into the stock of a company.
Ms. Sugathadasa speaking at the opening of the ‘investor day’ said to make the Colombo Stock Exchange and attractive place it must be a open, clean, fair and transparent market adding that “Only an effective regulatory framework will make the market fair and transparent.”
Meanwhile, President of Inter Company Employees Union (ICEU) Wasanthe Samarasinghe had earlier revealed said a share of Laugfs Gas was valued at Rs.35/-, 36/- and 37/- in the share market but this price was falsely increased to Rs.48/- and Rs.1500 million from the EPF funds has been invested to buy shares at Rs.46/- Immediately after this deal the shares had come down to Rs.40/- he pointed out.
He also revealed that a similar deceitful deal has been carried out with Grain Elevators Company. He said when the value of a share of this company in the market was Rs.75/-, it was artificially increased to Rs.236/- and funds of the EPF was invested in buying shares of the company. Now, a price of a share of the company has come down to Rs.102/- said Mr. Samarasinghe.
The President of ICEU said prices of shares going up in the share market is a normal procedure. However, shares that instantly go up and come down instantly is a sign of a serious deceitful act in the share market.