Appeal Court issues notices on SEC, CSE, Bartleet Religare after action by investor

The capital market has recently seen the first writ application against the regulator Securities and Exchange Commission (SEC) directly seeking to suspend or revoke the stockbroker license of a brokerage firm.

This is under Section 21 of the SEC Act owing to its findings at the statutory inquiry that numerous contraventions of the provisions of the SEC Act and the Stockbroker Rules of the CSE are of a very serious nature.

The President of the Court of Appeal, Vijith K. Malalgoda PC, and Justice S. Thurairajah PC recently directed that notices be issued on respondents, namely the Securities and Exchange Commission (SEC),its Director General Vajira Wijegunawardena, Bartleet Religare Securities Ltd, Colombo Stock Exchange Ltd. and Central Depository Systems Ltd. in relation to a writ application (bearing the number CA/Writ/340/2016) seeking to compel the SEC, inter alia, to carry out its mandatory obligation under Section 21 of the Securities Exchange Commission Act No. 36 of 1987 (as amended) to cancel or revoke the stockbroker licence granted to Bartleet Religare Securities Ltd.

Notices were issued pursuant to action filed by M.M. Melvani, who owned an investment portfolio maintained by Bartleet Religare Securities Ltd. Melvani in her petition alleged that the investment advisor and officials of Bartleet Religare Securities Ltd were responsible for the loss of most of her investment portfolio as well as the swindling of a large sum of money from her CDS account by unlawfully selling shares from same under various pretexts without her knowledge and consent and thus being liable for gross negligence, incompetence, breach of share trading agreement and breach of duty of care and fiduciary duty.  

The present action was instituted based on the conclusion on the findings at the statutory inquiry conducted under the terms of sections 13 (i) and 46 A of the SEC Act, into the conduct of the stockbroker Bartleet Religare Securities Ltd. which are of a very serious nature. 

The petitioner also sought a Writ of Prohibition restraining and prohibiting the Securities and Exchange Commission from renewing the licenses and registration granted to Bartleet Religare Securities Ltd. as a stockbroker or granting such new licenses or registration. 

The case will be taken up next on 30 November 2016. 

Counsel Mangala Niyarepola with Dasuni Wijesiriwardena and Sonali Ranagala instructed by D.L & F De Saram Attorneys-at-Law appeared on behalf of the petitioner.