The Securities and Exchange Commission (SEC), initiated an investigation into certain trades executed on the Colombo Stock Exchange in respect of Pure Beverages Co. Ltd.(PBC) shares on 29th January, 1993. The said investigation revealed that, Mr. Ana Punchihewa being the Managing Director of the company sold 20, 000 shares of PBC at Rs. 53.50 per share on the 29th of January 1993, immediately after the board meeting held on 28th January 1993, at which the accounts for the month of November and December were tabled. These accounts showed a significant loss of the company for the months November and December 1992. At the time Mr. Punchihewa disposed of his shares, the afforesaid price sensitive information was not disclosed to the public.

Charges were against Mr. Punchihewa for committing the offence of Insider Dealing. An offence under the SEC Act No. 36 of 1987 as amended, which reads as follows

Subject to the provision of subsection (8) and (9) an individual who is, or at anytime during the six months immediately proceeding the appointed date has been, connected with a company shall not trade in listed securities of that company if he has information of which,

(a) He holds by virtue of being connected with the company
(b) It would be reasonable to expect a person so connected and in the position by virtue of which he is so connected, not to disclose except for the proper performance of the functions attaching to that position; and
(c) He can be reasonably expected to know unpublished price sensitive information in relation to those securities”

The trial in this matter proceeded for almost three and a half years in the Fort Magistrates Court. In March 2000, Mr. Punchihewa requested the Comission to compound the offence against him in terms of section 51A of the SEC Act as amended.

The Commission having considered the facts and the circumstances in which the offence had been committed agreed to compound the said offence for a sum of Rs 481, 980/-, which was credited to the Compensation Fund of the Commission.

The case filed by the SEC in the Fort Magistrates Court was withdrawn by the Commission on the 21st June 2000.

Dr Dayantha C. Jayasuriya
Director General
For Securities and Exchange Commission of Sri Lanka.