The Securities and Exchange Commission (SEC) has taken urgent action to deal with fraudulent listed companies by filing criminal complaints against involved executives, aiming to protect the interest of small shareholders.
"The SEC gives priority to cases affecting the public and retail shareholders. In some cases, the amount or value [of fraud cases and trading of share prices] may not be high, but if effects are dispersed over many shareholders, then the [enforcement] process must be rushed," said Somchai Pongpattanasin, SEC assistant secretary-general in charge of enforcement.
Mr Somchai could not say at this time whether there will be further accusations against the management of listed companies.
A financial industry source said investors should monitor further developments as there could be additional charges against involved parties.
The SEC has filed criminal complaints against former and existing executives of four SET-listed companies with the Department of Special Investigation and, in some cases, with the Economic Crime Suppression Division of the Royal Thai Police.
The four listed companies are International Engineering Plc (IEC), Group Lease Plc (GL), Inter Far East Energy Corporation Plc (IFEC), and Triton Holding Plc.
Executives who have been charged with a criminal complaint will be prohibited from serving as directors and executives of listed companies under the SEC Act, which has been revised and became effective on Dec 12, 2016.
IEC is the latest listed company to receive a criminal complaint from the SEC. The market regulator on Tuesday accused former IEC executives and their associates of reciprocated dishonest acts, asset misappropriation, seeking unlawful gains, and filing incorrect financial statements to lure investors to purchase shares of the company's subsidiaries along with construction contracts and machinery purchases.
The Stock Exchange of Thailand (SET) yesterday placed a notice pending sign on IEC's share price as the company was unable to appoint audit committee members within three months as required by SET regulations.
If IEC is still unable to appoint such committee members by the stipulated deadline, the bourse will post a suspended trading sign on Feb 1, 2018 and the company could be delisted after three months of suspended trade.
Before the SEC Act was revised, some listed company executives were thought to engage in corruption, perform dishonest acts, or exploit benefits of retail investors.
Although many retail shareholders have acknowledged fraud, most were unable to block dishonest transactions or remove corrupt executives and directors because the law requires a vote of at least two-thirds of all shareholders.
The new law is a tool to help the capital market regulator deal with corrupt and dishonest executives of listed firms more efficiently.
Thailand's capital market has seen numerous fraud cases related to retail shareholders such as the IFEC and GL cases, for which certain executives have already been charged with criminal complaints.
However, in pending cases such as Energy Earth Plc and Polaris Capital Plc, the SEC has ordered companies to conduct a special audit on their financial reports.
Shares have been suspended from trading as they have yet to submit amended financial reports.
"We have tried to inform investors with these trading signs such as notice pending. I want investors to understand these signs and be cautious [in making investment decisions]," said SET senior executive vice-president Santi Kiranand.
In related news, the SEC is undertaking a public hearing to revise a notice on new shares offered to cornerstone investors (CI), defined as major institutional investors both domestic and overseas, in order for a company to successfully allocate share offerings to these investors.
"The intention to specify CI solely as institutional investors is aimed at preventing share offerings to investors known to engage in trading misconduct, which could in turn undermine the credibility of the capital market," said the SEC statement.
