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The 6 th International Conference on Financial Criminology

The 6 th International Conference on Financial Criminology “Economic Crimes in the 21 st Century” Supa Thamthitivat Director, Enforcement Department Securities and Exchange Commission, Thailand 5 th September 2014 Rangsit University, Thailand.

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The 6 th International Conference on Financial Criminology

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  1. The 6th International Conference on Financial Criminology “Economic Crimes in the 21st Century” Supa Thamthitivat Director, Enforcement Department Securities and Exchange Commission, Thailand 5th September 2014Rangsit University, Thailand • The views expressed in this presentation are those of the presenter and do not necessarily represent the opinion of the Securities and Exchange Commission, Thailand

  2. Agenda • Regulatory Structure in Thai Capital Market • Facts about Listed Company in Thailand • Enforcement Program: Today and Future • Recent Court Decision

  3. SEC’s Roles in Capital Market Balancing Role Market Development to Meet Economic Needs Market Integrity & Long-Term Sustainability Competitiveness Investor Protection Inclusive Growth Fair & Orderly Market Accessibility & Efficiency Reducing Systemic Risk

  4. Regulatory Structure in Thai Capital Market 4

  5. Three Wheels of Discipline in Capital Market • Prevention • Monitoring • Enforcement

  6. Mechanism Available

  7. Facts about Shareholder’s Structure in Thai Listed Company • Top 50 companies account for 76.5% of total market capitalization • Majority of companies listed on the Exchange are small/medium size • Average free float on the market is 47% (Only 139 companies have free float > 50%) • 66% of companies are family- controlled business • Sources: Stock Exchange of Thailand Source:Credit Suisse, 2011 “Asian Family Businesses Report”

  8. Thailand Has Been Improved in Corporate Governance CG ROSC Assessment:Thailand’s scores are above average in all area ASEAN CG Scorecard: Top 100 Thai listed company has the highest average score Sources: 1. ACGA, September 2012 2. World Bank – “Report on the Observance of Standards and Codes (ROSC): Corporate Governance Country Assessment – Thailand, January 2013 3. Thai Institution of Directors (Thai IOD)

  9. Enforcement Is the Area that Thailand Got the Lowest Score CG Watch Report 2012 • Judicial process is inefficient, only a small percentage of criminal cases has filed in court when compare with the total number of complaints filed by the SEC to criminal authority • No progress in the Civil Sanction Bill • Concern on corruption issue 9

  10. Economic Crime in Capital Market

  11. Current Public Enforcement Program • Administrative Sanction • Disqualify from serving as director/executive of listed company • Suspend/Revoke its privilege to do business in capital market:- B-D; IA; FA; Auditor etc.) • Exchange’s surveillance • Auditor’s report • Public’s complaints • Whistle blowers • Criminal Action • Out-of-Court Settlement  Monetary penalty • In-Court Action • Rely on other criminal authorities • Time consuming, in part, because of redundancy in info gathering • Independence of opinion • Level of expertise • Sufficiency of power for info gathering • Competency of officer • Temporary freeze of asset

  12. Deterring Transgressions Through Alternatives • Using CG awards as incentives for companies to practice CG best practices such as AGM award, CG ranking and CG Scorecard • Revise CG best practices, guidelines, self assessment tools to raise standards • Warning on possible abusive RPT and encourage Shareholder’s voting • Support roles of Thai Investor Assoc. • Urge for passage of Class Action Law • Closely supervise related party transaction and other major transaction • Revising RPT rules for more practical “related party”, role of audit committee and individual director, quality of professional opinion, quality of information for voting, etc. • Push forward for enactment of Civil Sanction Law • Study the use of share repurchase as redress mechanism

  13. Recent Court Decision in A Criminal Case Held 44.82% shares Parent Company CEO of Media Co. Held 0.98% shares Held 50.83% shares Media Company (Listed on SET) Guarantor Borrow 1,078 million Baht Guarantor Commercial Bank Falsify documents of Media Co. submitting to bank No disclosure of guarantee liability

  14. Recent Court Decision in A Criminal Case(Continue) • In March 2009, CEO was charged with 17 counts of corporate fraud. • CEO pleaded guilty during the midst of the trial. • In February 2012, the Criminal Court sentenced CEO for 85 years in prison. • Because of the guilty plead, the period of imprisonment was reduced in half to 42 ½ years. • However, under the Thai Criminal Code the maximum term for imprisonment is 20 years. So the final imprisonment term for CEO is 20 years. • Defendant appealed. • August 2014, the Appeal Court upheld the Criminal Court’s decision. • Late last month, Defendant filed a motion for Supreme Court’s review.

  15. Thank You

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