Reforms making Sri Lanka’s SEC enforcement more effective: IMF

ECONOMYNEXT – Sri Lanka’s Securities and Exchange Commission (SEC) has taken measures to improve investigation and enforcement capabilities with new skilled staff and processes, the International Monetary Fund (IMF) said.

The reforms include creating a new Litigation Division able to focus on litigation management functions, the IMF said in a new report after an assessment of SEC functions by an IMF Monetary and Capital Markets mission which visited Colombo.

The mission visit was in response to an SEC request for technical assistance.

The SEC has increased the number of investigation staff from just two in 2015 to 10 in 2017; selecting new staff with diverse professional backgrounds, including accounting, law and supervision.

It has also streamlined the process for opening investigations; enhancing accountability by instituting the practice of creating detailed investigation plans, while creating an electronic filing system accessible only by investigation staff to house investigation and resource files.

The capital markets regulator also entered into a consultation arrangement with the Attorney General’s office for services of dedicated counsel who provide advice, evaluating investigation files for criminal prosecution and advising enforcement staff and formalizing criteria for CSE surveillance referrals.

The IMF said the new Litigation Division will be helpful when the new SEC law comes into effect giving it news powers to prosecute wrong doing.

The SEC’s former Legal and Enforcement Division was responsible for both policy development and litigation supervision.

Under the new SEC law, the SEC will have independent authority to commence civil and administrative enforcement cases.

“The new powers will require the SEC to have experienced litigation counsel to effectively prosecute cases, rather than simply act as liaison between the SEC and the Attorney General’s Department,” the IMF said.





“Establishing a Litigation Division will position the SEC to be able to move expeditiously to handle both its liaison role and new prosecution functions.”
(COLOMBO 23 May 2019)

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