The Stock Exchange of Thailand (SET) has asked the Finance Ministry to amend the law to empower the Securities and Exchange Commission (SEC) to directly file lawsuits against corporate fraudsters, with the aim of ensuring high-impact cases can be sent to courts within 5-6 months.
SET chairman Kitipong Urapeepatanapong said the bourse sees a need to quickly amend the law after several fraud and stock manipulation cases, including those of Stark Corporation and Energy Absolute, which have caused widespread damage to investors.
According to the chairman, the bourse has filed fraud cases with the SEC almost every month, or a total of around 30-40 cases on average per year.
"Currently, the process of cases under the SEC Act has many steps and involves many agencies. Thus, it takes several years for some cases to reach the court," he said. "We have to rebuild confidence as quickly as possible, so it needs to amend the law by issuing a royal decree to make it effective quickly."
In the future, the SEC can file a lawsuit directly with the prosecutor without having to go through the police. That is similar to the practice seen in the US, South Korea, and Japan, he added.
On Sept 6, the SET will hold a seminar about the investigatory process of cases involving listed companies, with prosecutors from South Korea invited to join the event.
"We studied how such cases proceed in South Korea and found that all the process is done and sent to the court in just one month," Mr Kitipong said. "If we can amend the law to give the SEC the authority to investigate and file the cases directly to the prosecutor, we will be able to shorten the period to 5-6 months."
In the next few months the SET will sign an agreement to strengthen cooperation with the main agencies involved in investigating securities cases, including the SEC, the Anti-Money Laundering Office, and the Department of Investigation, aiming to reduce duplication of work and speed up the process.
In the future, executives and owners of listed companies may be required to disclose information in using securities as collateral for loans in order to alert investors to keep their eyes on companies they are investing in, he pointed out.
"The SET is currently considering whether it is appropriate to impose this rule and we or the SEC must hold a public hearing according to the procedure if we want to go ahead with it," he said.
Recently, there were cases when executives of companies used their shares as collateral and the shares were sold after the price dropped significantly, causing the company to change the major shareholders. This has raised concerns among investors.
Mr Kitipong spoke on the sidelines of the SET's second "Family Business in the Globalisation Asia" conference. The bourse estimates around 100 family businesses in Thailand have the potential to be listed on the Thai stock exchange.
As businesses from Cambodia, Laos, Myanmar and Vietnam also participated in the two-day event, the SET sees the opportunity and interest of companies from those countries to be listed on the Thai bourse in the future, he added.