Let’s put market back on track, Nalaka tells SEC
- Assures he will strictly go by the SEC Act
- Says investigations must be persisted with but with a clear timeframe
- Being a professional marketer, says perceptions and sentiments matter; Stresses capital market development role with focus on small-timers, SMEs
- Promises regular stakeholder consultation, impact analysis before coming up with new regulations
By Nisthar Cassim
The newly-appointed Chairman of the Securities and Exchange Commission (SEC) Dr. Nalaka Godahewa’s key message to the Secretariat staff last week after assuming duties was: Get the stock market back on track and he along with the rest of the Commissioners will stick to the Act and give necessary leadership to both pragmatic regulation and capital market development.
Third Chairperson in 27 months: Top professional Dr. Nalaka Godahewa signs a document to mark the assumption of duties as the Chairman of the Securities and Exchange Commission last week. Among the senior staff present to witness the occasion were (from right): Acting Director General Prof. Hareendra Dissabandara, Director Investigations Dhammika Perera, Director Surveillance Chandu Epitawala, Assistant Director External Relations and Market Development Tushara Jayaratne, Director Corporate Affairs Surana Fernando, Director Legal and Enforcement Ayanthi Abeywickrama, Assistant Director Supervision Himani Weerasekera and Director Finance and Administration Ianthie Jayaratne
Upon assuming duties, Dr. Godahewa met with the Directors of the SEC for about 40 minutes for a frank discussion, after which he addressed the staff.
Having clarified that as per the SEC Act the Chairman is non-executive, Godahewa had assured: “I will strictly go by the Act.” He also had said the way forward would be implementing the Act in its broader sense and scope as opposed to only regulation.
Being a professional marketer, Godahewa had said in markets, perceptions and sentiments matter as well and it was important to revive the market which plays a critical role in providing access to finance as well as returns to the investing public.
In line with the Government’s vision, the importance of small-time investors as well as encouraging Small and Medium Enterprises as part of capital market development was also stressed. “A vibrant capital market is important to the country’s economy. Such a market will make the raising of fresh capital by the private sector more attractive, apart from providing the investing public with a decent return,” Godahewa had pointed out.
Largely linked to his appointment and pragmatic regulation despite criticism by others the market revived last week with its value rising by Rs. 64 billion thanks to retailers returning. Year to date dip in ASI was reduced to below 15% from 17.5% in the previous week.
Godahewa had also emphasised that investigations should be pursued with, but there must be a clear timeframe for conclusion of such investigations and inquiries for proper effectiveness, greater integrity and accountability.
The Secretariat staff had told the new SEC Chairman said that even the most complex investigation could be concluded within three to four months.
On perceptions in the market about driving fear among investors, Godahewa had inquired how many investigations were being handled at present and the figure suggested had been around 18. Thereafter Godahewa had inquired about the veracity of 300 letters being sent to investors and the answer from the staff was that they were fact-finding letters. “If that is so, it must be communicated clearly in such letters,” the SEC Chairman had emphasised.
Godahewa has also assured the SEC Secretariat staff that even with regard to himself or any companies to which he was connected, if there were investigations, he would declare his interest and stay away from deliberations as a professional. He had cited the SEC Act, which says six of the 10 commissioners are drawn from the private sector hence there could be instances where when necessary the concerned Commissioner could flag off his interests and stay away.
The provision for private sector personnel in the Act was also cited by Godahewa to stress the point that a Commissioner whilst serving the SEC could continue to engage in other positions.
During the discussions with the Directors, a question was posed as to how frequently the SEC consulted stakeholders. The answer had been very frequent or quarterly in the past, but not very frequently of late. In that context, the new Chairman had said that it was important to engage stakeholders more often and proper consultation was critical before implementing new rules and laws. He had also said that the SEC must do an impact analysis of any new regulation before its implementation. “This way the SEC can ensure there are no ad-hoc regulations,” he had pointed out.
Prior to meeting the SEC Secretariat, Godahewa met his appointer – President and Finance Minister Mahinda Rajapaksa. Analysts said that as in the case of previous chairpersons, the message from President Rajapaksa must have been to make the capital market dynamic so as to serve its purpose, benefitting all stakeholders.