SET warns of punishing phoney sales

SET warns of punishing phoney sales

Spurred by weekend arrest of fraud suspect

The Stock Exchange of Thailand is threatening to punish securities companies and their employees if they are found to be involved in selling initial public offering shares they do not have.

The bourse has asked for information from brokerages as to whether companies and their personnel have taken part in IPO fraud, SET president Kesara Manchusree said on Monday.

Kesara: Do homework on IPO companies

IPO fraud entered the spotlight after police over the weekend arrested a man suspected of fake sales of nearly 1 million shares each in three newly listed companies — Carabao Group Plc (CBG), Vichitbhan Palmoil Plc (VPO) and Muangthai Leasing Plc (MTLS).

Damages could reach into the hundreds of millions of baht. Police remain uncertain as to whether any brokers played a part in the scam.

Retail investors recently complained to stock regulators that some groups had brought IPO shares to sell to investors in the over-the-counter (OTC) market but that the investors had not received any shares after transferring the money.

With the juicy returns on IPO shares, supply has fallen short of demand, and most have been set aside for clients of brokers involved in underwriting, Mrs Kesara said.

"The SET would like to warn investors wanting to invest in IPO shares or any shares through the OTC market that they should check whether those claimed shares have been approved for primary or secondary offerings," she said.

"They also should check whether brokers involved in the sales have a mandate as financial advisers and underwriters."

The SET has no authority to crack down on fraud that occurs in the OTC market for stocks that have not won Securities and Exchange Commission (SEC) approval for their IPO filing, but victims can bring criminal charges, Mrs Kesara said.

She suggested checking the details of coming IPOs on the SEC and SET websites.

"The IPO market was very active this year, as some companies' returns hit a ceiling of 200% on the first day of trade, so it helps to boost sentiment in the OTC market," Mrs Kesara said.

"I suggest investors buy them through SET members and trade them via the SET in order to be safe."

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