would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc.. 
Home
The allegation made by a Securities and Exchange Commission of Sri Lanka (SEC) source as reported in the lead story on the business pages of this newspaper in its last week’s edition, that 95% of the insider trading deals in this country could be unearthed if phone tapping is allowed is indeed shocking.
It is not only shocking, but also throws open the question as to whether the authorities here are ipso facto, then moving in to the next stage, ie by passing the relevant laws to make phone tapping permissible here to catch such miscreants who misuse and abuse public money by indulging in such illicit practices?
The source made particular reference to the case of the disgraced Sri Lankan born but US based stock trader Raj Rajaratnam who was successfully prosecuted by the US authorities and sentenced to jail for insider trading recently. However Rajaratnam is expected to appeal against his sentence.
Rajaratnam’s successful prosecution was possible after the US authorities got court permission to tap his phone calls which led to the detection or discovery of this fraud known as insider trading.
Insider trading in short is knowing the “going ins and coming outs” of a particular listed company of which the general public however is unaware of at the time such information has been leaked to a specific person, and that person making use of such knowledge to make illegal profits.
Illegal because that knowledge had not been in the public domain, and such white collar crooks being privy to that type of information, make profits at the expense of an unknowing public who have also invested in the shares of the concerned companies, but disadvantaged because of not being privy to such information, thereby operating on inequitable terrain.
Such information is got, as in the case against Rajaratnam revealed, by bribing company insiders, making him to be well ahead of the pack, by knowing what to buy and what not to buy and what to sell and what not to sell, of relevant stocks and shares exclusively to his advantage, because of the prior knowledge he had had in regard to the “movements” of the concerned companies, before such information was made public, or reached public domain.
As said in a previous business editorial in this newspaper (see The Sunday Leader of March 6, 2011), a public quoted company is a firm that belongs to the general public, and its operations, past, present and that which is envisaged in the future, should be known to all, without any discrimination.
While conceding the fact that there are majority shareholders of such companies, the law is such that the rights of minority shareholders are also protected and the ordinary members of the public not only have the right to invest in the shares of such quoted companies, but also have to be privy to the “going ins and coming outs” of those companies, thereby being in a position to take advantage of that knowledge, without such information being confined to a privilege few who indulge in making illegal profits as a result.
Howbeit insider trading need not necessarily be committed by a majority shareholder, or for that matter a minority shareholder. It may even be committed by a rank outsider, meaning an investor who had not bought into such securities thus far, but, being privy of the going ins of such quoted companies by fair means of foul, thereby gaining first mover advantage, procure the shares of those companies and make a profit by disposing of such shares or holding on to the same for gain, by being privy to confidential information, confidential in the sense that that news had not reached public domain, but only to him from an investor perspective.
An investor involved in insider trading does not have to immediately sell his securities to make capital gain. He may be privy to a pending rights issue by a company or a similar such thing and thus invest in those shares to gain that undue advantage.
In this regard, there is a rumour doing the rounds in the local bourse, that recently a high networth individual (HNWI) allegedly had inside information of a blue chip company’s impending share issue of a particular nature (not a rights issue). By being privy to such prior information, he had allegedly first pushed those shares up and then dumped them at a profit, while almost at the same time again allegedly re-invested in those shares by buying them low, thus also taking advantage of that particular share issue, by standing to gain more shares of that blue chip stock as a result of that action.
That is a classic case, nay an open and shut case of insider trading in the local market if that allegation is true. If that charge is “certain,” that also means that HNWI was privy to that pending particular share issue which however the investing public didn’t know of. And he took mean advantage of that prior knowledge to profit by the same at the expense of an unwitting and ignorant investing public.
There may be plenty of “open and shut cases” similar to the above, of insider trading, in the domain of Sri Lanka’s securities market.
That may well be the reason for that SEC source to tell this newspaper that 95% of insider trading cases in Sri Lanka could be found out if the authorities, like in the USA permit the SEC or the relevant agencies to tap the phones of suspects involved in those criminal deals.
Investments in the stock market are investments made with public money. So such investments should not be allowed to be abused by rogue investors indulging in insider trading by fair means or foul at the expense of other investors.
Sri Lanka has a history of share trading running into several decades, nay, well over a century. While granting the fact that the market went through turbulent times due to political change, like embracing anti-market dogmas and policies like Socialism/Marxism during this period; it has, however, for over 35 years since, been practising free market economics despite certain aberrations.
Being a mature or immature market should however not be made an excuse of allowing or not allowing the long arm of the law to investigate the abuse by insider trading by going that extra mile of tapping the phones of white collar crooks to collect evidence against them.
If the USA, which is held as the pinnacle, nay the beacon of human rights (HR), justice and freedom, should have a clause in its law to allow for phone tapping as has been the case of Rajaratnam, possibly on the perception that public money is sacred and therefore cannot be misused or abused, why cannot Sri Lanka, with all the allegations against it on HR abuse, do a simple thing like pass the relevant laws to prevent the misuse and abuse of public money by rogues involved in insider trading, even if it means going to the extent of tapping the calls made by such suspects?
Or, is it that the authorities want to adopt that holier than thou attitude by not being allowed to be further tainted of HR abuse by not allowing such laws to be passed, or worse still, are there some rogue traders which the system wants to protect, known or unknown to the powers that be, that preclude the authorities from passing the required laws to allow for phone tapping of insider trading suspects?
Under the circumstances, it’s interesting to know what President Mahinda Rajapaksa in his capacity as Finance Minister under whose aegis the SEC operates and who likes to say that he is committed to champion the rights of the common man, would do?
http://www.thesundayleader.lk/?p=39677
It is not only shocking, but also throws open the question as to whether the authorities here are ipso facto, then moving in to the next stage, ie by passing the relevant laws to make phone tapping permissible here to catch such miscreants who misuse and abuse public money by indulging in such illicit practices?
The source made particular reference to the case of the disgraced Sri Lankan born but US based stock trader Raj Rajaratnam who was successfully prosecuted by the US authorities and sentenced to jail for insider trading recently. However Rajaratnam is expected to appeal against his sentence.
Rajaratnam’s successful prosecution was possible after the US authorities got court permission to tap his phone calls which led to the detection or discovery of this fraud known as insider trading.
Insider trading in short is knowing the “going ins and coming outs” of a particular listed company of which the general public however is unaware of at the time such information has been leaked to a specific person, and that person making use of such knowledge to make illegal profits.
Illegal because that knowledge had not been in the public domain, and such white collar crooks being privy to that type of information, make profits at the expense of an unknowing public who have also invested in the shares of the concerned companies, but disadvantaged because of not being privy to such information, thereby operating on inequitable terrain.
Such information is got, as in the case against Rajaratnam revealed, by bribing company insiders, making him to be well ahead of the pack, by knowing what to buy and what not to buy and what to sell and what not to sell, of relevant stocks and shares exclusively to his advantage, because of the prior knowledge he had had in regard to the “movements” of the concerned companies, before such information was made public, or reached public domain.
As said in a previous business editorial in this newspaper (see The Sunday Leader of March 6, 2011), a public quoted company is a firm that belongs to the general public, and its operations, past, present and that which is envisaged in the future, should be known to all, without any discrimination.
While conceding the fact that there are majority shareholders of such companies, the law is such that the rights of minority shareholders are also protected and the ordinary members of the public not only have the right to invest in the shares of such quoted companies, but also have to be privy to the “going ins and coming outs” of those companies, thereby being in a position to take advantage of that knowledge, without such information being confined to a privilege few who indulge in making illegal profits as a result.
Howbeit insider trading need not necessarily be committed by a majority shareholder, or for that matter a minority shareholder. It may even be committed by a rank outsider, meaning an investor who had not bought into such securities thus far, but, being privy of the going ins of such quoted companies by fair means of foul, thereby gaining first mover advantage, procure the shares of those companies and make a profit by disposing of such shares or holding on to the same for gain, by being privy to confidential information, confidential in the sense that that news had not reached public domain, but only to him from an investor perspective.
An investor involved in insider trading does not have to immediately sell his securities to make capital gain. He may be privy to a pending rights issue by a company or a similar such thing and thus invest in those shares to gain that undue advantage.
In this regard, there is a rumour doing the rounds in the local bourse, that recently a high networth individual (HNWI) allegedly had inside information of a blue chip company’s impending share issue of a particular nature (not a rights issue). By being privy to such prior information, he had allegedly first pushed those shares up and then dumped them at a profit, while almost at the same time again allegedly re-invested in those shares by buying them low, thus also taking advantage of that particular share issue, by standing to gain more shares of that blue chip stock as a result of that action.
That is a classic case, nay an open and shut case of insider trading in the local market if that allegation is true. If that charge is “certain,” that also means that HNWI was privy to that pending particular share issue which however the investing public didn’t know of. And he took mean advantage of that prior knowledge to profit by the same at the expense of an unwitting and ignorant investing public.
There may be plenty of “open and shut cases” similar to the above, of insider trading, in the domain of Sri Lanka’s securities market.
That may well be the reason for that SEC source to tell this newspaper that 95% of insider trading cases in Sri Lanka could be found out if the authorities, like in the USA permit the SEC or the relevant agencies to tap the phones of suspects involved in those criminal deals.
Investments in the stock market are investments made with public money. So such investments should not be allowed to be abused by rogue investors indulging in insider trading by fair means or foul at the expense of other investors.
Sri Lanka has a history of share trading running into several decades, nay, well over a century. While granting the fact that the market went through turbulent times due to political change, like embracing anti-market dogmas and policies like Socialism/Marxism during this period; it has, however, for over 35 years since, been practising free market economics despite certain aberrations.
Being a mature or immature market should however not be made an excuse of allowing or not allowing the long arm of the law to investigate the abuse by insider trading by going that extra mile of tapping the phones of white collar crooks to collect evidence against them.
If the USA, which is held as the pinnacle, nay the beacon of human rights (HR), justice and freedom, should have a clause in its law to allow for phone tapping as has been the case of Rajaratnam, possibly on the perception that public money is sacred and therefore cannot be misused or abused, why cannot Sri Lanka, with all the allegations against it on HR abuse, do a simple thing like pass the relevant laws to prevent the misuse and abuse of public money by rogues involved in insider trading, even if it means going to the extent of tapping the calls made by such suspects?
Or, is it that the authorities want to adopt that holier than thou attitude by not being allowed to be further tainted of HR abuse by not allowing such laws to be passed, or worse still, are there some rogue traders which the system wants to protect, known or unknown to the powers that be, that preclude the authorities from passing the required laws to allow for phone tapping of insider trading suspects?
Under the circumstances, it’s interesting to know what President Mahinda Rajapaksa in his capacity as Finance Minister under whose aegis the SEC operates and who likes to say that he is committed to champion the rights of the common man, would do?
http://www.thesundayleader.lk/?p=39677
