The Securities and Exchange Commission's (SEC) move to slap four top executives of CP All Plc, Thailand's biggest convenience store operator, with hefty fines for insider trading deserves a round of applause.
It gives society hope that when the big fish break the law, they can be caught too.
The financial penalties for insider trading also raise questions about corporate governance at CP All, the local operator of more than 8,000 7-Eleven stores nationwide.
The SEC said on Wednesday it fined Korsak Chairasmisak, chairman of the executive committee, Piyawat Titasattavorakul and Pittaya Jearavisitkul, two vice-chairmen of the executive committee, and Athueck Asvanund, the firm's chief legal officer, a total of 33,339,500 baht for using inside information to buy shares in Siam Makro Plc.
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The regulator also fined Somsak Chiarawisithkul and Areeya Asvanund, Mr Athueck's daughter, a separate, equal amount of 333,333.33 baht for aiding and abetting insider trading.
A referral from the Stock Exchange of Thailand led to the SEC probe, which found these people had privileged access to information about CP All's plan to buy Makro for 189 billion baht. They then bought Makro shares based on that confidential information.
The purchases were made between April 10 and 22, 2013 when CP All was in negotiations with SHV Netherlands BV to buy 154.43 million shares or 64.35% of Makro at 787 baht apiece.
Wednesday's announcement caused the company stock price to tumble 5.4% yesterday, the biggest fall in more than two years and also undermined the firm's credibility.
Brokerage DBS Vickers (Thailand) said in a report to clients: "The case may not have an impact on CP All's earnings but it could somewhat affect the image of the group."
Bloomberg news agency quoted Sasikorn Charoensuwan, head of research at Phillip Securities (Thailand) Plc, as saying, "This insider trading should not take place at this company with a good international reputation.
"This has raised serious concerns about corporate governance among international investors. The company will probably need an urgent overhaul to restore confidence."
But at yesterday's news conference, Mr Korsak, who was hit with the heftiest fine of 30.23 million baht, did not seem to agree. There was no sign of remorse.
Mr Korsak, also an avid player and instructor of the ancient Japanese board game Go, said he did not think it was wrong to buy the shares openly when the takeover deal was in the making.
"When I was buying the shares, I didn't know if the deal would sail through as there were other bidders too," said Mr Korsak, who is also vice-chairman of the board of directors. "CP All still has good governance although I may have made a mistake unintentionally," he said, adding he would remain working for the company he helped turn from losses to profits over two decades ago.
But the Thai Institute of Directors (IOD), which rates corporate governance of listed companies, said the incident will affect next year's rating of CP All, which currently has a "Good" scoring by the IOD.
"The board of directors is duty-bound to set a policy that prevents exploitation of internal information and to ensure everyone abides by this policy," said IOD's CEO and President Bandid Nijathaworn.
"Such incidents are a lesson for the board to enforce its policies strictly," he said. To the SEC's credit, the regulator has been doing its job fairly well both in catching stock price manipulators and insider traders.
CP All is the sixth insider trading case this year and the fines are the highest in four years.
Other big fish in smaller listed companies have been caught in the past, but the CP All case has drawn much more media interest as it is a subsidiary of the country's largest agro-industry conglomerate, Charoen Pokphand Group.
The business empire of CP, which will celebrate its centenary in 2020, ranges from animal feed to cooked meat, cell phones, cable TV and convenience stores.
The group has received bad publicity from accusations of deforestation to using slave labour in its poultry plants and seafood supply chain -- all of which the company has categorically denied.
The group aims to raise standards with a focus on sustainable development for its stakeholders. Resolving the corporate governance issue at CP All is a watershed for the group to achieve its sustainability goal by 2020.
Nopporn Wong-Anan is deputy editor, Bangkok Post.