The Securities and Exchange Commission (SEC) has imposed civil fines on current and former executives of Inter Far East Energy Corporation Plc (IFEC) on grounds of insider trading.
The market regulator has ordered IFEC chief executive and director Suphanan Rittiphairoj and former director Thanawat Chansuwan to pay civil fines and return total benefits worth a combined 25.86 million baht.
The SEC's investigation found that both Mr Suphanan and Mr Thanawat attended the company's board of directors meeting on Nov 1, 2016 and acknowledged how IFEC lacked sufficient financial liquidity to repay its debt obligation for bills of exchange (B/Es) coming due at year-end 2016.
Mr Suphanan and Mr Thanawat subsequently used insider information to sell IFEC shares through their own securities trading accounts in the amount of 10.15 million and 978,000 shares, respectively, in order to avoid losses incurred from a decline in share price following the company's liquidity problem and debt repayment.
"The action of the two aforementioned individuals, which is based on material facts regarding changes in a share price, to sell IFEC shares is considered an offence under Section 241 and is penalised under Section 296 of the Securities Act of 1992, which was enforced when such wrongdoing was committed," the SEC said in a release. "Such action is also an offence under Section 242 and is penalised under Section 296 and 296/2 of the amended Securities Act of 2016."
The Civil Penalty Committee has granted permission for the SEC to impose a civil sanction against Mr Suphanan and Mr Thanawat through civil fines and an order to return total benefits worth a combined 25.86 million baht.
If these two individuals refuse to comply with the imposed civil sanction, the SEC will send a letter asking the prosecutor to file a civil lawsuit, requesting the highest payment rate prescribed by the law and return the benefits incurred from the offence, the regulator said.
Since Mr Suphanan has been implicated in insider trading and lacks credibility as a director and executive of a company issuing securities, his current positions as IFEC chief executive and director must be vacated from the date specified in the SEC letter notifying him of his lack of credibility.
Separately, IFEC held a shareholders' meeting on Wednesday to reconsider conditions of nominating potential candidates to the company's board of directors.
The meeting's resolution was that the company had cancelled all previous conditions of nomination and that any shareholders wanting to nominate their candidates to fill vacancies on the board could submit documents from Aug 27 to Sept 4.
"The company will verify the qualifications of all candidates within seven days after the due date," IFEC said in a release.
It was reported earlier that Mr Suphanan continuously refused to set up a shareholders' meeting. His previous attempts to appoint two new directors failed because these individuals had not received the Commerce Ministry's endorsement, owing to a lack of qualifications and an unclear appointment process.
The crisis has stretched on for a year and six months, leading investors to take matters into their own hands despite having market regulators in place.
The Public Limited Company Act requires a firm to have at least five directors to hold a shareholders' meeting. IFEC had nine directors, including former chairman and chief executive Wichai Thavornwattanayong.
But four people resigned after the company's failure to repay B/Es and bank loans, while Mr Wichai was accused by the SEC of failing to disclose information about the firm's B/E default.