The Stock Exchange of Thailand (SET) has imposed a fine of 5.85 million baht on Asia Wealth Securities Co Ltd for naked short-selling.
Naked shorting is an illegal practice of short-selling shares that have not been affirmatively determined to exist. Traders generally must borrow a stock, or determine that it can be borrowed, before they sell it short.
Rongrak Phanapavudhikul, executive vice-president and head of legal affairs for the SET, said the penalty imposed on Asia Wealth resulted from an examination conducted by the bourse's securities regulation division.
The exchange found that Asia Wealth's customers did not own those shares before selling them, as there was no document to verify share ownership.
The securities firm's claim that such selling is based on discussions or a verbal agreement is also deemed unlawful, Mr Rongrak said.
"The SET's broad conditions require those wanting to conduct short sales [of securities] to have share ownership before short-selling, which is aimed at facilitating flexible operations," he said.
Asia Wealth accepted the fine, Mr Rongrak said, adding that the bourse's disciplinary committee has no stake in business competition as claimed by Asia Wealth.
