Sri Lanka stock market boss wants â€˜pump & dumpâ€™ scammers dealt with
ECONOMYNEXT – Colombo Stock Exchange (CSE) Chairman Ray Abeywardena has called for action against those behind a ‘pump and dump’ scam where share prices were artificially inflated and then dumped on unsuspecting investors.
Abeywardena was quoted as saying in a CSE statement that it was a ‘miracle’ that the market had survived the last four years without a single local captive fund investing in shares.
This was despite assurances from those in power that the Employees’ Provident Fund would be permitted to get back to the market.
Abeywardena’s comments were made at the 7th Annual Capital Market Conference organized by UTO Educonsult (Pvt) Ltd. when asked for his views on the plans to develop the market.
“Responding to a query on why the captive funds were being kept away after the ‘pump & dump’ accusations were made, he said that persons responsible must be brought to book to ensure that others are not penalized for past wrong doings,” the statement said.
“Whilst foreign investors continue to be prudent in their stock selection and continue to make investments, the locals funds are unable to seize the opportunity,” he said.
The ‘pump and dump’ scam, where prices of certain, usually illiquid, small cap stocks, were artificially inflated and then sold, took place several years ago.
But despite years of investigations, no one has been held accountable, creating doubts about the CSE among investors.
Abeywardena, asked what his expectations for the market were, said that getting the captive funds back into the market would be a priority.
It was high time that safe guards were put in place to monitor investments made by the captive funds, Abeywardena said.
They can be restricted to investing in the top 20 companies only, he said.
(COLOMBO, March 18, 2019-SB)