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SEC chief Thilak resigns; one commissioner follows suit

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Director - Equity Analytics
Director - Equity Analytics

By Duruthu Edirimuni Chandrasekera

Amidst the rumpus at the crisis-hit Securities and Exchange (SEC) and its Chairman Thilak Karunaratne’s resignation on Friday, Sanjay Kulatunga, one of the commissioners stepped down on the same day after a losing battle against alleged market manipulators and political pressure. Mr. Kulatunga, a director at Amba Research told the Business Times that he resigned on principle.

This came as the 75-strong staff at the SEC wrote to President Mahinda Rajapaksa urging him not to accept Mr. Karunaratne’s resignation letter which was to be sent on Friday. “All staff queued up to sign the letter and before doing so they came and implored the Chairman not to resign,” a SEC staff member told the Business Times on conditions of anonymity. He said that the staff wasn’t forced to sign this letter. “This letter was a letter which was kept at the reception and any SEC employee could sign it. They had absolutely no pressure at all,” he said.

There has been a chorus of protests and concern including from the Ceylon Chamber of Commerce over the developments at the SEC and Mr. Karunaratne’s decision to step down in the wake of rising powerful investor and political pressure, after getting tough against alleged manipulators and insider traders.

The Sri Lanka Institute of Directors (SLID) also expressed concern over the events saying the independence of regulatory bodies is an important contributing factor towards entrenching confidence in a country’s capital market and economy. “any attempts to negatively interfere with the professionalism and independence of a regulatory body such as the SEC will only lead to widespread indiscipline and a break down in law and order and the resultant negative impact on the workings of the capital market. We urge the Governing Authorities to take the immediate necessary steps in redressing the current situation at the SEC and ensure that regulatory bodies are given the freedom to manage independently,” it said in a statement.

Some of the high net-worth traders are now ‘negative net-worth’, markets sources said. “However they are not under water because they are still holding on to their margin calls/positions because of their asset value,” a market analyst said. “But these values are also fast declining as their liabilities are rising due to rising interest rates, which is worrying them,” he said. He said that this coupled with the SEC probes against them were distressing them and leading to desperate moves to boost the market in whatever form.

Capital Alliance Ltd, which was a member of the Colombo Stock Brokers Association, resigned two weeks ago from the association joining four others – CT Smith Securities, JB Stockbrokers, Somerville and IIFL who quit earlier. A source close to the company said that they were dismayed at the way the regulator was treated and challenged by some high-net investors at the meeting that all stakeholders had with the President in July.

Analysts say that bull markets are seven year cycles (1993-4, 2002-3 and 2009-11) with the next one still far away. “As such there will be no rising tide to lift the stocks,” the analyst said, adding that the equity market is in its consolidation phase. While there was a high growth in the Colombo stock market seen in 2009, 2010 and in the first quarter of 2011, it also caused a high degree of price volatility and it also created many regulatory and supervisory issues. “This was the reason that the regulator was forced to step in and take several – perhaps not very popular – measures to restrain the volatility and to lessen the systemic risk in the market,” a stockbroker who was present at the meeting with the President told the Business Times.

He said that the market will be erratic for the remainder of this year. “Nevertheless, a sideways (erratic) market offers many opportunities to invest in undervalued securities as the potential for mispricing is larger.” Analysts say that low, free-float large market cap stocks in the indices are masking the true extent of the fall in the market with many stocks down 50-60% in value from their peak. They point out that the free float is further constrained since there will be reluctance to sell at a loss especially amongst state controlled institutions holding shares.

But they reiterate that value is returning to the market – some stocks are now trading below their intrinsic values. “Trying to time the market is futile – jumping on the band wagon when it’s moving is a losing proposition,” another analyst said.

2SEC chief Thilak resigns; one commissioner follows suit Empty Who is Sanjay Kulatunga? Wed Oct 10, 2012 4:31 am


Stock Trader

Sanjay Kulatunga -Thank you for Resigning from SEC
To the best to our knowledge you were an Analyst at HNB Stock Brokers for 8 years and only had a theoretical knowledge of our market. You mislead Tilak and Indrani who could have been good Chairpersons and cleared the market with Speculation and Credit under the disguise of bringing in credibility to a vibrant market. You threw out 50,000 small investors out of the market and created the present empty market.

Truth About Kulatunga

SEC and CSE insiders outline that Sanjay Kulatunga who holds a series of Executive Directorships within the Beira Group of companies and a member among SEC Commissioners had been disliking the extension of broker provided credit to Sri Lankan investors since where he manage his stock investment portfolio the broker is not giving him credit at all.

Some sources also outline that Sanjay Kulatunga is also one of the top investors who had invested in Rs.6 per share private placement of Expolanka Holdings (EXPO) which offered Rs.14 per share in the IPO that was termed to be one of the only overpriced IPO’s in Sri Lanka’s Capital Market history that ‘Robbed’ Sri Lanka’s poor retail investors money in a IPO.

CSE and SEC insiders say that Kulatunga is a nominee in EXPO’s Board of Directors by Sri Lanka’s premier Bluechip John Keells Holdings PLC since John Keells had invested in 83.3 million shares of EXPO through EXPO’s unpopularized Private Placement. Kulatunga is also a Director of Amba Research Lanka-a stock market research firm, which he helped setup in 2003.According to CSE sources Kulatunga had been appointed to SEC as a Commissioner by a top finance ministry official who had vested interests with a Chairman of a premier blue chip conglomerate which probably would have nominated him there too.

Kulatunga’s Beira Group of companies, is a Group that is engaged in export manufacturing and import substitution. Prior to his stints as an entrepreneur and manager, Kulatunga functioned as an equities analyst for Hong Kong based Jardine Fleming Securities, starting in Colombo and culminating as a
Regional Real Estate Analyst in Hong Kong. He has a 1st Class Degree in Commerce from the University of Poona, India and an MBA from the University of Chicago, Booth School of Business. Kulatunga is also as associate member of the Chartered Institute of Management Accountants (ACMA) as well as a Chartered Financial Analyst (CFA).

Kulatunga is Non-Executive Independent Director at Expolanka Holdings PLC (EXPO) and Odel PLC (ODEL) in which a Private equity investor Phoenix Ventures Limited (2.49 million shares; 1.72% stake) given pre-listing stakes in ODEL later sold out after its initial public offer which was heavily oversubscribed, according to the firm's accounts in September 2010 and December 2010.

Meanwhile it is questionable according some SEC insiders whether Sanjay Kulatunga had another deal involved in the latest revamping of SEC Official website ( by Cyber Concepts (Pvt) Ltd ( since it had learned from sources that Sanjay Kulatunga had earlier given a deal to the same company to develop a website for a company titled ‘Buzz Technologies (Pvt) Ltd. ‘ where Sanjay Kulatunga was the Chief Executive Officer.

That time Kulatunga had appreciated the work by Cyber Concepts (Pvt) Ltd adding that “We have worked with Cyber Concepts (Pvt) Ltd for the last 18 months, developing the…”

It is also learnt from industry sources that the latest development of SEC website was done by Cyber Concepts (Pvt) Ltd using a cheap web development technology such as wordpress freely available blog platform. Blog designs and Wordpress CMS designs are considered to be web platforms that are freely available which could be developed without much effort by changing few source codes.

Some investors and several top capital market industry professionals are also concerned how much SEC would have paid to the Ravi Rajapathirana (MD/CEO) of Cyber Concepts (Pvt) Ltd ( (skype id: ravira4437; mobile number +94 772242915) who is maintaining a foreign currency account number bearing 5011 4000 0026 or 5011 9000 0016 at Sampath Bank Ltd of Sri Lanka.

In Cyber Concepts official website it is clearly said that “We have successfully completed the securities exchange commission’s Content Management System. The CMS has been built on top of the popular blogging platform called WordPress”

“SEC is a body that is getting funded through public money and government funds.
It is a question; when there are top website developing companies in the country who can do a much better job why SEC had selected this particular company which had only done few simple website designs with free technology” another concerned investor and a member of the general public questioned.

Courtesy; Some insights about Sanjaya Kulatunga and CSE Leaks (

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