SEC suspends investment advisor role; on-leave-Dinal to fight to clear his name

Thursday, 24 May 2012 02:11 - - {{hitsCtrl.values.hits}}

The Securities and Exchange Commission (SEC) has suspended the Investment Advisor role of Taprobane Securities CEO Dinal Wijemanne, who was also part of the consortium of sellers of TFC shares to NSB.

Daily FT learns the SEC decision to suspend, made at Monday’s Commissioners meeting, was until full-scale investigations are completed. In a related development, Dinal is on leave, allowing the broking firm to do its own internal investigations. Sources close to him said that Dinal, who has been engaged in capital markets for over 20 years, is keen to clear his name of any wrongdoing.

There has been market talk that SEC was probing Dinal for alleged front running and/or insider dealing, but analysts said that the NSB-TFC deal was a negotiated and agreed one and had been discussed with NSB for some time, hence he didn’t posses price sensitive insider information, whilst the quantum of shares eventually sold versus the quantity bought before the sale wasn’t exceptionally material.

Dinal was also a Director of TFC at the time of the sale whilst another TFC director was also part of the consortium of sellers.

Whilst SEC has for the past several weeks sought information from Dinal, it couldn’t be confirmed whether the suspension follows a formal process including an impartial hearing with a show cause. Some noted CSE was the cancelling authority and not the SEC though it will be on latter’s advise. SEC hasn’t yet formally announced the suspension of the licence of Dinal.

The 13% TFC stake deal was reversed last week by the SEC.

In a related development, four more Board members of the NSB have resigned by yesterday.

Early this week, NSB Chairman Pradeep Kariyawasam tendered his resignation letter whilst Treasury has also asked for a report from its nominee on the NSB Board. Last week Working Director T. Abeygunwardena resigned from NSB over the manner in which the deal was done whilst it was reported that four more directors have resigned as well.

FT Link