Capital markets and regulation

USA’s insider trading, front running, tweets, failures to disclose and parallels in Sri Lanka

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I am a firm believer in a “Market Economy” but as I often define it in print, electronic media and in public fora, a “sustained Market economy” is one that is prepared by its available, prompt, pro-active, progressive and up to date, fair, just and equitable, legally enabled and enforce-able “Robust Regulation.” It is against this backdrop that I write about the emerg-ing loss of credibility of a once respected jurisdiction.

Trump’s DOGE and Musk’s chainsaw

The Trump administration, has begun to inflict deep cuts in the financial budget and staff resources of “independent” fed-eral regulators’ agencies, including its Securities and Exchange Commission. All this under its Department of Government Efficiency (DOGE), which no less than Elon Musk heads. SEC – the capital market regulator reportedly offered $ 30,000 to many of its employees, encouraging them to resign or retire by 21 March! But what happened in January 2025?

Tesla’s, and Musk’s regulatory intervention

The US SEC announced in January 2025, that it had filed action against Elon Musk for failure to file a beneficial own-ership report with the regulator, on a timely basis, pursuant to his acquisition of more than five percent of the out-standing shares of Twitter.

Beneficial ownership reporting in the US

The USA has beneficial owner-ship reporting requirements under their Securities Exchange Act of 1934. Surpassing a 5% threshold triggers a mandatory public disclosure, within the required 10-day window.

Delayed and false disclosure and fines in Sri Lanka