SEC calls for civil charges on fraud

The Securities and Exchange Commission will ask the Finance Ministry to amend the law to let the SEC bring civil fraud charges against those suspected of unfair trading practices.

The call for change is an attempt to improve the efficiency of the SEC’s crackdowns.

A committee comprising SEC officers and experts in securities, finance and accounting will be responsible for imposing civil penalties, said SEC deputy secretary-general Vasant Thienhom.

The securities watchdog has faced jibes of being a paper tiger, as it has no authority to press charges against manipulators and those who are alleged to use inside information for their own benefit.

Under the current Securities and Exchange Act, all suspected cases are considered criminal liabilities, meaning a time-consuming process, and the SEC has a duty only to gather evidence for the Department of Special Investigation and the Office of the Attorney-General to decide whether cases can go to trial.

Statistically, legal actions against unfair securities trading practices taken by the SEC have shown a less than satisfactory outcome, with few cases going to trial or defendants convicted by the court.

SEC secretary-general Vorapol Socatiyanurak said the SEC currently pursues suspected violations by filing a criminal complaint with police for further investigation.

But if the military regime lets the SEC file complaints and press cases through civil procedure, the process will take less time and limit the damage caused by wrongdoers.

“For example, if someone makes money from share manipulation and the case remains under investigation and the criminal procedure code, that person will have a chance to spend that money through wrongdoing and make a lot more money,” Mr Vorapol said.

“If we are authorised to seize money from share manipulation, they will have no seed funds to profit further and we can limit the damage that person can cause.”

According to SEC data, 21 of this year’s 64 criminal sanctions as of the end of June were for market manipulation and five were for insider trading.

From the SEC’s formation in 1992 to 2012, the securities watchdog filed 459 complaints, of which 48% were sent to an attorney, 18% resulted in charges filed, 16% saw convictions by a court, 13% involved suspects who escaped and 5% were cases in which the period to file charges expired.

Mr Vasant said the territories that apply civil penalties to securities offences include Hong Kong, Singapore, Malaysia, Australia, France, Italy and the US.

He said the number of offences related to stock manipulation is falling at the moment, while cases involving insider trading are climbing.

The decline in market manipulation could be due to efforts by the SEC and the Stock Exchange of Thailand, such as the turnover list.

Investors who trade stocks on the turnover list are required to pay by cash only to alert investors and reduce trading activity in those shares.

The SEC has also proposed the Finance Ministry amend regulations concerning mortgage-backed securities.

These are debt obligations that represent a claim on the cash flow from a pool of mortgage loans. The entity issues securities representing a claim on the principal and interest payments made by borrowers in the pool, a process known as securitisation.

Share your thoughts

Back to top

More From