SEC mulls fraud civil sanctions

The Securities and Exchange Commission (SEC) is considering issuing civil sanctions and fines against listed companies’ executives or directors who are involved with fraud cases, regardless of whether criminal proceedings have been suspended.

Many fraud cases have evidence but fraudulent executives cannot be punished until criminal proceedings are finished, said Somchai Pongpattanasilp, assistant chief of the SEC.

“Most people think corruption is a serious matter and the offender must be sent into jail. Sometimes, the burden of proof for a criminal case allows wrongdoers who engage in corruption to get away with it because much solid evidence is required to convict,” said Mr Somchai.

“These fraudsters also have professional legal counsel to advise them before they engage in corruption.”

As an ex-judge, Mr Somchai said many fraud cases occurred during 2014-2015, where many listed companies increased capital for private placement offerings to specific investors at prices significantly lower than market prices.

At present, a civil sanction is unable to proceed if the criminal proceedings have not finalised.

If the SEC is able to undertake civil sanctions, it would also be able to impose a fine and return money to involved companies and exploited parties, he said.

“The capital market and investment environment have changed much from the past. Some activities we have learnt by experience are fraud cases, but prosecutors are unable to find evidence for solid convictions. Hence, the law must be changed in accordance with the changing investment environment,” said Mr Somchai.

For the 10 months that the civil sanction has been effective since Dec 12, 2016, the SEC has imposed civil sanctions on eight cases involving 21 people and companies, delivering fines of over 50 million baht to the Finance Ministry.