Right of Reply: SEC responds to ‘Cracks in SEC?’

The Securities and Exchange Commission of Sri Lanka (SEC) writes in response to the article published in Daily FT on Monday 28 May 2012 under the caption ‘Cracks in SEC?’

The article has stated that the Chairman has written to the Ministry of Finance that the Senior Commission Member  P. Jayawardena must be removed from the SEC.

The reason cited was the non attendance of Commission Meetings on three consecutive occasions.

The SEC categorically states that the SEC Act Section 5(5) requires that “an appointed Member of the Commission who without leave of the Commission first being obtained, absents himself from three consecutive meetings of the Commission, shall be deemed to have vacated his office.”

 Please note that  P. Jayawardena’s vacation of office is by operation of law.

The SEC notes with interest as to why certain interested parties are attempting to mislead the public by headlines such as ‘Cracks in SEC’ where there are no cracks whatsoever. It is surprising that your paper that appears to crusade for the upholding of the law is trying to carry on a campaign against the SEC that has exercised the law.

The SEC is shocked at the disregard shown in your statement “the rule non attendance for three consecutive meetings is not strictly enforced”. This is not a mere rule but a strict provision of the Act and the SEC cannot ignore or disregard provisions of its own Act.

Without prejudice to the stance taken above, the SEC states that Mr. P. Jayawardena has absented himself without prior leave from the Commission first having being obtained for eight meetings out of nine ( five consecutive meetings) after the present Chairman took office.

All Members of the Commission have to discharge their responsibilities towards the office upholding the best institutional interests of the Commission. It is the duty of all Commission Members to uphold the very provisions of the Act which they seek to enforce on the public.

It is with serious concern that the SEC notes that your paper has misled the public in remarking “However, it was only Commissioner Jayawardena who had been present in Courts along with lawyers when a case against the SEC by Melstacorp was taken up recently”.

This is a false and irresponsible statement made by your paper in respect of a matter which came up before the Court of Appeal on 15th May 2012. At no stage, was Mr. P. Jayawardena retained to appear for the SEC. It is a senior President’s Counsel who was retained to appear on behalf of the SEC and its Chairman and the said Counsel represented the SEC in Court. There was no necessity for any Commission Member to be present, since notice has not been issued on them by the Court.

Your paper article gives misleading information to the readers as if lawyers retained by the SEC were not present other than Mr. P. Jayawardena. This kind of misrepresentation is a serious concern especially when the information is contrary even to Court records.

Further the article states that “the recent tougher rules announced last week too hadn’t received unanimous approval from SEC Commissioners”. The SEC reiterates that the decision in question received unanimous approval of the Commission as usually done contrary to the statement in the article though the Act indicates all questions for decision at any meeting of the Commission shall be decided by the vote of the majority of the members present.

We wish to further state that the SEC Act does not provide for “tougher” or “milder” rules but rules to provide effective capital market regulation.

If the SEC had failed to implement the provisions of the Act which pertains to the removal and resignations of appointed Members, your esteemed newspaper would have carried yet another headline stating that the SEC had violated its own Act. When the SEC implemented the Act your paper carries a headline stating that there are ‘Cracks in the SEC’.

We would appreciate if you could resort to responsible journalism and verify facts from the SEC prior to publishing articles of this nature which only contributes to help parties with agendas which are detrimental to the proper regulation of the capital market.







Editor’s Note:

The Daily FT article at the onset did clearly state that removal of SEC Commissioner P. Jayawardena was on account of non-attendance for three consecutive meetings over which he is deemed to have vacated post as per SEC Act.

The SEC Chairman’s reply is silent over other issues such as strained relations including Jayawardena writing to authorities on some matters.

Furthermore, the Daily FT article only mentioned that Jayawardena was present when the case filed by Melstacorp Ltd. was taken up and didn’t state he was retained to appear on behalf of the SEC.

The Daily FT also rejects improper insinuations made against the newspaper in the SEC’s statement.

The SEC’s response on the article concerning use of private counsel will be published tomorrow with the Daily FT’s response.