Thailand is planning new rules to check stock-market manipulation by allowing the regulator to file civil lawsuits and impose hefty fines on the law-breakers.
The rules take inspiration from the success of U.S. regulators in getting monetary settlements, Vorapol Socatiyanurak, secretary general of the Securities & Exchange Commission, said in an interview in Bangkok today. A bill with the proposals has been sent to the National Council for Peace and Order, Thailand’s junta leaders.
The rules aim to strengthen regulation as current laws only allow for criminal charges to be filed against suspected manipulators, Vorapol said. Such court cases stretch on for years and most defendants are acquitted for lack of sufficient evidence, which has been difficult to gather, he said.
“We hope the new legislation will scare any stock manipulators,” Vorapol said. “We may not be able to put them in jail, but at least we can prevent them from enjoying the huge profit from illegal equity trading and can impose huge amount of fines on them.”
Small-capitalization stocks have led a rally in Thailand’s $435 billion equity market this year since the military seized power in a coup on May 22, the nation’s 12th in 82 years. The MSCI Thailand Small Cap Index has risen 16 percent since the coup through yesterday’s close, compared with an 11 percent advance for the benchmark SET Index. (SET)
Strengthen Credibility
Thailand’s proposed rules come as prosecutors and regulators around the world are investigating firms to determine how traders at more than a dozen firms colluded to rig benchmark interest rates. At least nine financial firms have been fined about $6 billion for manipulating Libor, the benchmark interest rate for more than $300 trillion of securities worldwide.
The U.S. Securities & Exchange Commission said this month Bank of America Corp. will pay $245 million to settle allegations that it failed to disclose rising mortgage losses and the risks of bonds tied to home loans.
“Strict and quick enforcement of the law would be beneficial in reducing and preventing stock manipulation,” Kesara Manchusree, president of the Stock Exchange of Thailand, said in an interview in Bangkok today. “This will definitely strengthen the Thai stock exchange’s credibility among international investors.”
Junta leader Prayuth Chan-Ocha was appointed the nation’s prime minister last week after a vote in the National Legislative Assembly, whose members he selected. Thailand’s King Bhumibol Adulyadej on Aug. 24 endorsed Prayuth as premier.
(A previous version of this story corrected the spelling of Vorapol’s name)
To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net
To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Phani Varahabhotla, Justin Carrigan