International Monetary Fund (IMF) advises Securities and Exchange Commission of Sri Lanka (SEC) to streamline the current enforcement program and bring several high-profile criminal actions soon that will have a positive impact on the public’s confidence in the SEC as a regulator, a technical assistance report for enhancing the effectiveness of the Sri Lankan Securities Market Enforcement program released by IMF highlights.

In the released document the IMF said it is imperative that the SEC bring enforcement actions for there to be credible deterrence in the securities market. IMF also recommends an adaptation of criteria for prioritizing cases and publication of the results of enforcement actions, policies, and procedures.

The further IMF states in report that it is critical to instilling confidence that the SEC handles its responsibilities in a fair and consistent way is for the members of the Commission and other decisional officers to be transparent on contacts received from the public on ongoing enforcement related matters.

“At the moment, the investigation team has prioritized several re-opened matters involving trading activity in 2010–11, which was a highly volatile period for the CSE. These matters had been prematurely closed without thorough investigation,” the report said adding that the SEC has suffered reputational harm as a result because the public had expected the SEC to take action to address apparent trading irregularities by certain high-profile market participants.

“The SEC has determined that it is key to regaining public confidence for it to take another look at these matters” the report noted.

“The SEC has a publication policy which specifies which enforcement action to be published on its own website and how long such enforcement action to be kept on the website,” the report said adding however, the time limitations set for the publication of certain enforcement actions negatively affects the transparency of the regulator and therefore the policy needs to be revised.

“Moreover, the policy itself should be published and the file of enforcement results should be maintained permanently on the SEC’s public website” the report notes. The report also recommends metrics to measure the effectiveness of the enforcement program as there have been insufficient enforcement results to have a significant impact on conduct in the securities market. The report also suggested that in addition, the SEC might want to invite stakeholders to attend an annual conference where the SEC could receive feedback on whether it is achieving credible deterrence.