Members of the management team and others involved in the fraud surrounding Stark Corporation (STARK) could face up to 10 years in prison if found guilty, the Securities and Exchange Commission (SEC) said on Monday, as it tried to restore confidence in the Thai capital market.
The SEC's acting secretary-general Thawatchai Pittayasophon said that as well as the Stock Exchange of Thailand (SET) and nine other concerned agencies and associations, a large number of investors had suffered damage due to their investment in Stark, while the credibility of the Thai capital market had been adversely affected.
So far, corporate bondholders with a total principal outstanding value of nearly 9.2 billion baht have been affected through a default of payments, while individual investors have faced losses as Stark's market capitalisation has decreased by more than 37 billion baht since the end of February.
According to the SEC, Deloitte Touche Tohmatsu Jaiyos Co audited Stark's financial statements for 2021, and reported that the company had made a profit of 2.79 billion baht. But PricewaterhouseCoopers ABAS later conducted a special audit that found the company had net losses of 5.98 billion baht for the year, as well as a 6.65 billion baht loss in 2022.
In addition, the special audit also found 202 unusual sales transactions, amounting to 8.06 billion baht and 3.89 billion baht in 2021 and 2022, respectively.
The maximum penalty the auditors could face under the SEC and Federation of Accounting Professions authorities is the revocation of their licence, but if the investigation finds evidence of corruption, they would be punished under regular laws pertaining to fraud like everyone else, said Mr Thawatchai.
"The auditor admits that there are loopholes. If the auditor is found to have committed an offence as well, they must be guilty of the same law as other people involved in such a case, with the maximum penalty of 10 years imprisonment," he noted.
The SEC has also carried out an investigation regarding how Stark's corporate bonds were offered to retail investors as well as institutional and high-net-worth investors, who were the targeted buyers for the bond issuance, added Mr Thawathai.
The SEC and SET also clarified that there has been no seizure of any related person's assets in this case so far because the authorities said they "still need to collect various evidence and a wide range of victims".
"Everyone expects that the SEC will speed up the law enforcement in this case, but we cannot release details at the moment. With some actions, we need to cooperate with the Anti-Money Laundering Office, the Department of Special Investigation and other agencies," Mr Thawatchai said.
"Although the SEC does not have the power to sue on behalf of the shareholders, we can help to gain cooperation from corporations with other related agencies [to do so]."
The Thai Investor Association (TIA) said 1,759 retail investors in the Stark case had registered for class action legal proceedings totalling 4.06 billion baht in damages. TIA will provide knowledge on class action lawsuits and act as a mediator to give victims the opportunity to meet and exchange information.
Association of Investment Management Companies chairwoman Chavinda Hanratanakool said the association was quick to take action on the case and mutual funds had not realised losses.
Investors can rely on mutual fund responsibility and be confident that all organisations concerned have worked well together in verifying the facts of such cases, she said.