ERI fined Rs 10m for SEC rule violations

The Securities and Exchange Commission has fined Environmental Resources Investment (ERI) over Rs 10 million for violating SEC listing rules and regulations.

The SEC in a statement said yesterday it conducted an investigation pertaining to certain corporate disclosures made to the Colombo Stock Exchange (CSE) by Environmental Resources Investments PLC (ERI PLC) and its Director Board.

The evidence elicited during the above investigation suggested that ERI PLC and the Board of Directors thereof have contravened the Listing Rules of the CSE as well as the SEC Rules published in the Gazette Extraordinary No. 1215/2 dated December 18, 2001 through certain non-disclosures and dissemination of misleading information to the CSE relating to certain material information concerning the Company.

The said non-disclosures and dissemination of misleading information were particularly in respect of certain related party transactions as well as cross border investments of ERI PLC.

However, subsequent disclosures have been made to the CSE by the Company pertaining to the aforesaid material information a year after the said disclosures should originally have been made.

The Commission at its meeting, held on August 10, 2011, having considered the matters pleaded by ERI PLC and the circumstances surrounding the commission of the offences referred to above have decided to compound the said offences against the Company, the Chairman and the two Executive Directors in terms of Section 51A of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 1987 as amended, upon payment of sums of money to be credited to the Compensation Fund of the SEC by the said parties.

The following payments were effected on behalf of ERI PLC, the Chairman and the two Executive Directors:

Rupees Three Million and Three Hundred Thousand (Rs. 3.3 Million) on behalf of ERI PLC, Rupees Three Million and Three Hundred Thousand (Rs. 3.3 Million) on behalf of Dr. Kosala Heengama, the Executive Director, Rupees Three Million and Three Hundred Thousand (Rs. 3.3 Million) on behalf of Gregory Scott Newsome, the Executive Director and Rs. 500,000 on behalf of Chairman Lalith Heengama.

The two Independent Directors have been warned by the Commission.

The money has been credited to the SEC Compensation Fund and thereafter the offences against the Company, the Chairman and the two Executive Directors have been compounded.