Securities & Exchange Commission (SEC) Act No 36 of 1987 as amended, in Section 25 requires a Licenced Stock Exchange, a Licenced Stock Broker or a Licenced Stock Dealer to inform the SEC and obtain its prior consent before it undergoes any change from its stake specified in the application for a licence as a Stock Exchange, Stock Broker or a Stock Dealer. A contravention of this rule is an offence punishable under the SEC Act.

Obtaining approval of the SEC in this instance is important to ensure that the criteria prescribed in the granting of a licence is continuously met by the company, and that good standards are maintained throughout.

CDIC Sassoon Cumberbatch Stockbrokers (Pvt) Ltd, (CDIC Sassoon), a Stock Broking Company licenced by the SEC was recently warned by the SEC for the contravention of this provision of the SEC Act. The firm was also cautioned that any further breaches could result in legal action being taken against the firm, and the firm's licence being cancelled/suspended.

SEC in July 1999 informed all the Stock Broking Companies including CDIC Sassoon of the importance of ensuring compliance with the relevant rule. SEC strictly warned CDIC in September 1999 for the same contravention.

Dr. Dayanath C. Jayasuriya
Director General
For Securities & Exchange Commission of Sri Lanka