SEC gets tough on “misleading” Blue Diamonds

The Securities and Exchange Commission (SEC) has toughened its stand on Blue Diamonds Jewellery Worldwide Plc for allegedly misleading shareholders and investors.

The SEC has appointed Ernst & Young as a special purpose auditor to conduct a thorough probe.

In a directive, SEC said it has received several complaints from shareholders and investors that Board of Directors of Blue Diamonds Jewellery Worldwide Plc (BLUE) have mislead shareholders and investors in relation to interim financial statements for the quarter ended on 30 September 2015 and have misused for the benefit of Related Parties, the proceeds raised at a recently concluded Rights Issue.

Having considered at its 366th meeting held on 29 January, the gravity of the allegations received by the SEC has entrusted Ernst & Young to carry out a special purpose audit to check the veracity of the allegations made in the interests of the Company, its shareholders and the investing public.

The scope of the Audit will be to verify utilisation of proceeds collected from the Company’s Rights Issue; indentify and quantify related party transactions and check the extent of compliance of interim financial statements with Sri Lanka Accounting Standards No 34 - Interim Financial Reporting (LKAS34).

SEC has directed BLUE to engage Ernst & Young to carry out the Special Purpose Audit and to submit to E&Y all information and access to such information stored in the books, documents and electronic devices of the company as the auditor may require to discharge its audit or any of the duties entrusted by SEC. All BLUE directors and officers are required to ensure information within their knowledge is available to the auditor and ensure such information furnished is not false or misleading in any material particular and ensure no information stored are altered, destroyed or removed and to fully cooperate with the auditor.

BLUE is also required to pay E&Y professional fees and all costs incurred in carrying out the Special Purpose Audit inclusive of all statutory dues and taxes when payment is requested by E&Y.