This story was originally published on Echelon.

The Securities and Exchange Commission of Sri Lanka recovered Rs207 million in enforcement actions in 2025, the most in its 38-year history. In an interview, its chairman, Hareendra Dissabandara, appointed in October 2024, says the agency persuaded 45 companies that had formally sought to delist from the Colombo Stock Exchange to remain.

Dissabandara says the Rs188 million market-manipulation settlement in 2025, with a party whose identity has been withheld, the largest in the SEC’s history, was agreed by a previous commission, and that he would not have chosen to settle.

Dissabandara is an academic, a professor of finance and corporate governance at the University of Sri Jayewardenepura, and has worked at the SEC twice before: as director of its Capital Market Education and Training Division from 2008 to 2012, and as director-general from 2012 to 2013.

Under the Securities and Exchange Commission of Sri Lanka Act No. 19 of 2021, he returned to govern an institution with a more complicated past than its record recoveries suggest. The 2021 law replaced one under which the commission could only pursue wrongdoers through criminal prosecution in open court, conducted by the Attorney-General, a process so slow that cases filed under it remain unresolved today. The new law gave the commission five tools it did not have before: it can now settle cases out of court, impose administrative fines, pursue wrongdoers through civil proceedings, freeze assets during an investigation, and act against five defined categories of market misconduct: false trading, market rigging, stock-market manipulation, false statements, and manipulative devices. Critically, when the SEC now reaches a settlement, it can recover up to three times what the offender made. In December 2025, it used that power to recover Rs188 million from a manipulator who had made Rs62.7 million.

The record recovery, however, sits alongside a shrinking caseload. Total investigations fell from 62 in 2024 to 48 in 2025, of which only seven concluded in enforcement action, against 36 conclusions in 2024.

The market itself tells a similar story. Sri Lanka had 296 listed companies in 2021 and 285 in 2025. Market capitalisation, the total value of all shares listed on the exchange, has fallen from the equivalent of 36.7% of GDP in 2021 to 27% in 2025. Notable companies that delisted include Nestlé Lanka in August 2023, which had been a public company for 42 years, and Expolanka Holdings, which followed in September 2024.

“What matters is not whether a minister appoints you, but whether there is a process, a manual, a documented system that cannot be overridden by one person’s phone call.”

The Rs188 million settlement of December 2025 is widely reported as this commission’s landmark achievement. Was it your decision to settle rather than prosecute?

The incident took place on March 22nd 2022. Both the Colombo Stock Exchange and the SEC identified it, and it was referred to the previous commission on April 3rd, 2023. That commission weighed two options: prosecute or settle.

The individual applied for a settlement and was given two weeks to pay, but missed the deadline, and the matter dragged on. My commission finally executed the settlement in December 2025. But the decision to settle rather than prosecute was made before I arrived.

Had I been there, I would not have chosen settlement. Criminal prosecution, the court route, carries a minimum of ten years’ imprisonment on top of the fine: that is the real deterrent. A settlement means no criminal record, no conviction, no name in the public domain. My predecessors weighed those options and chose settlement. I inherited that decision, and I cannot reverse it: if one commission could undo another’s decisions, there would be no institutional continuity. But I want to be clear: this is not how I would have approached it.

The public doesn’t know who paid 188 million rupees. Anonymity was a condition of the settlement, not a legal requirement: the Act does not prohibit naming them. Will you name manipulators going forward?

The settlement agreement has its conditions. That was agreed, and I cannot undo it.

But yes, going forward, name and shame is something I believe in. If you look at the SEC website, under enforcement, we publish names: the settlements under the previous act, the compounding cases, and the insider-trading cases are all listed there. What I would say is this: the culture must shift. People must know that if you manipulate this market, your name will be public. That fear must exist, and it is not there at the level it should be.

What I can also tell you is that this was not the only settlement. Several smaller settlements were made around the same time as the Rs188.1 million case. That was the largest, but the mechanism has been used more than people know, ranging from Rs516,000 to Rs63 million over the same period. The SEC has been settling cases all along; people simply did not know.

Investigations fell from 62 in 2024 to 48 in 2025, with only seven concluding in enforcement action. The caseload is shrinking. Is the commission pursuing fewer, more complex cases, or are they taking longer to conclude?

There are three sources from which we identify cases: our own surveillance, now run through the Nasdaq system, which is fully implemented and generating alerts we never had before; CSE observations; and petitions, newspapers, and other outside information. Nothing is dropped. Everything goes to the Surveillance and Investigation Committee, which meets when necessary rather than on a fixed schedule. If something material is detected today, the director-general calls the SIC today.

A falling number of investigations does not mean we are doing less. I have introduced a surveillance manual, an investigation manual and an enforcement manual, all new and all in place as of 2026. Before, decisions relied on judgement; now there is a process, and no one, including me, can handpick a case or close one without going through it. I do not visit the surveillance division, nor the investigation division. They can investigate me; I have told them so, and I mean it.

For 2026, it depends on what is detected. Cases take three, four, five years: that is the nature of investigation. Some accused receive a summons three times and still find reasons not to appear: family problems, illness, overseas travel. You cannot treat people inhumanely. But that luxury will not last indefinitely.

The Compensation Fund holds Rs 917 million, Rs 125 million from the 2025 settlement alone. Yet it cannot pay victims of market manipulation — only broker insolvency. No investor has ever claimed from it. Is there appetite to change that?

The purpose of the Compensation Fund is clear under the Act: it exists for breach of contractual obligation, primarily where a broker fails to meet its obligations to an investor. That has not happened; no broker has gone bust, so the mechanism has never been triggered. I understand the question: why isn’t this money going to investors harmed by manipulation, but that is a separate matter. The fund was designed for a specific purpose, and changing that requires amending the Act, which requires Parliament.

What I will say is this: the fund is growing, and Rs917.2 million is not a small number. Whether its mandate should expand is a legitimate question, and I won’t say today that it never will. The 2021 Act was a major reform. There can be another.

When you took over, several companies had already delisted or were in the process of doing so. What does it say about the market that so many want to leave?

When I joined in October 2024, five days after President Dissanayake’s appointment, there was deep uncertainty. People did not know whether economic stability would hold, companies could not show profits, and transparency requirements felt like a burden. Forty-five companies came to me and said they wanted to go; six of them came more than ten times.

I said no, every time. Not because I was being obstinate, but because if a company of scale leaves this market, the negative signal is worse than the company ever being listed in the first place.

I want to be honest: some of those 45 had genuine reasons, post-crisis operations, regulatory-compliance costs, and an inability to access capital through the exchange. The exchange was not working for them as a capital-raising mechanism, and that is a real problem. You cannot force companies to stay if the market offers them nothing in return. That is why market development, including new instruments, derivatives, digital assets, and the 12-pillar growth roadmap I launched in October 2025, is not separate from enforcement. It is the same job.

NDB disclosed a Rs13.2 billion fraud. You summoned the board of NDB, and the auditor was changed. Where does the SEC’s investigation stand?

Our mandate is investor protection. When the disclosure happened, I read it immediately. The initial announcement to the Colombo Stock Exchange on April 2nd 2026 put the fraud at Rs380 million, with NDB warning the final fig ure could be substantially greater. I told my assistant director-general that morning: this number is wrong. The unspecified-asset line in NDB’s accounts had grown from Rs1.37 billion to Rs12.7 billion, and someone who knows how to read a balance sheet can see that a figure of that scale does not appear overnight. I was right: four days later, on April 6th, NDB revised the figure to Rs13.2 billion, 35 times its initial disclosure.

We summoned the board. We asked about the unspecified-asset segment, and why a line of that size had been growing without board knowledge. There were no answers. I asked about the internal-check system: the same person was performing two functions, with no segregation of duties. The chairman and the CEO are both risk professionals from HSBC, so I asked what their risk-management arrangement was. No answers.

We brought the auditors in, and they could not explain certain things. The auditor was changed. We referred the financial statements to the Auditing and Accounting Standards Monitoring Board, which is investigating whether the statements and disclosures complied with accounting standards. We are also running a parallel examination through our corporate and investigation divisions, both of which are active.

As for the Central Bank, sharing the forensic report with us took some persuading. I made clear that we were entitled to that information under the Act, and that legal action remained an option if it were not provided. The report is still with their auditors, but once we receive it, we will conclude our work. Whatever the Central Bank does on the banking side is its own mandate; what happens to investors, the timing of disclosure, the accuracy of announcements, and the protection of shareholders is mine.

“There Are Three Sources From Which We Identify Cases: Our Own Surveillance, Now Run Through The Nasdaq System, Which Is Fully Implemented And Generating Alerts We Never Had Before; CSE Observations; And Petitions, Newspapers And Other Outside Information. Nothing Is Dropped. Everything Goes To The Surveillance And Investigation Committee, Which Meets When Necessary Rather Than On A Fixed Schedule. If Something Material Is Detected Today, The Director-General Calls The SIC Today.”

The Finance Minister appoints the SEC chairman. Thilak Karunaratne was pressured out by a president who held that same portfolio. What stops a future government from doing the same to you?

Ministerial appointment of a regulator is not unique to Sri Lanka: the MAS chairman in Singapore is appointed by the cabinet, SEBI’s chairman is a government appointment, and the FCA’s chair is appointed by the chancellor. What matters is not whether a minister appoints you, but whether there is a process, a manual, a documented system that cannot be overridden by one person’s phone call.

I have put those systems in place: the surveillance manual, the investigation manual, the enforcement manual. No case can be opened or closed without going through the process. I have told my team that even I cannot touch these; the process decides. That is the protection.

I also want to say something else. I do not come here for the salary; what I take home is not, by any measure, a sum that would keep a person in this role for the wrong reasons. I come here because I believe this market can be something, and this is my country, with my own children in it. If I am pressured to do something wrong, I will leave. That is not structural protection; you are right about that, but it is real.