IMF Mission focuses on how SEC could tackle evolving Capital Market misconduct

Reviews selected, anonymised investigation files



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At the request of Sri Lanka's Securities and Exchange Commission (SEC), a Monetary and Capital Markets (MCM) mission of the IMF has concentrated on how to assist the SEC in enhancing the effectiveness of its enforcement programme.


The mission which comprised MCM experts focused on the SEC's enforcement programme organisation, operations and investigation processes and training.


In 2015, The World Bank Market Development Financial Sector Assessment Program (FSAP) highlighted the challenges facing Sri Lanka and recommended modernization reforms. In July 2016, an International Organization of Securities Commissions (IOSCO) Review Team (RT) assessed the SEC against IOSCO's Objectives and Principles and made detailed recommendations for amendments to the SEC Act, including for the enforcement programme.


To complement the work done by the World Bank FSAP and the IOSCO RT, the mission focused on the SEC's enforcement program organization, operations and investigation processes and training. The mission also reviewed selected, anonymised investigation files. The mission generally used as a framework the work of the IOSCO RT and the seven factors identified in IOSCO's June 2015 paper entitled "Credible Deterrence in the Enforcement of Securities Regulation" (CD report).'


The mission concentrated on practical, operational steps that the SEC could take to build capacity to increase the deterrent impact of its enforcement program in the current and anticipated regulatory environments.' The mission noted that the SEC, under the current leadership, has taken significant steps in the last two years to address the enforcement program deficiencies identified by the World Bank FSAP and IOSCO RT.


The mission recommended that the SEC continues to pursue measures to improve efficiency, effectiveness and accountability. These include: streamlining enforcement related processes to facilitate timely and efficient investigations and prosecutions; adopting criteria for prioritizing investigations and cases and publishing such criteria, where appropriate, to instill public confidence in fair and orderly markets; adopting an accountability mapping system (i.e., program management tools) to track investigation plans and human and financial resource allocation; establishing expert units and/or identifying individual experts to handle specific types of complex investigations and cases (e.g., insider dealing and manipulation); developing staff training modules on these complex matters; and enhancing the enforcement policies and procedures manual to create a detailed, organic and electronic roadmap readily accessible by enforcement staff to guide the conduct of investigations and prosecutions.


 


 
 
 
 
 
 
 
 
 
 
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