The "Bad Boys" of the SET

"The Settlement Committee under the Securities and Exchange Act B.E. 2535 (1992)(the SEA) and the Provident Fund Act B.E. 2530 (1987)(the PFA) comprises 3 members,who are representatives of the Royal Thai Police Headquarters, the Fiscal Policy Office of the Ministry of Finance, and the Bank of Thailand."

The committee meets eight to twelve times per year.

The violations range from short-selling of securities to brokers mismanaging their clients accounts (know-your-client rule), and include more serious charges such as fraud. The fines usually range in monetary value from 30,000 baht to 200,000 baht. Often, brokers are charged for multiple violations at a time, and the total fine can be over a million baht.

Some examples of fines include:

- Failure of a securities company to comply with the SEC rules and regulations with regard to segregation of client's assets, by not sending reports to client within the specified period. Fine - 116,100 baht

- Failure of a securities company to comply with the SEC rules and regulations with regard to segregation of client's assets, by misappropriating client's assets, without attaining prior consent, for the benefit of another. Fine - 48,600 baht

- Failure of a securities company to properly record and maintain all telephone conversations with clients with regard to order execution and recommendation as specified by the SEC. Fine - 110,250 baht

- Short-selling of securities by a securities company. Fine 82,500 baht

KGI Securities has incurred the most fines levied by the SEC since 1999, followed by Kim Eng. To be fair, Kim Eng is the largest broker, and could be expected to have more violations than some of the smaller brokers.

This list is somewhat positive for investors as it shows that the SEC is at least actively policing the brokerage community, and if an individual investor feels that they have been wronged there is some sort of recourse.

Complete information can be obtained at: http://www.sec.or.th/secen1/enforce/actions/settleen.shtml . The monetary value and reason for each individual fine is listed in these pages.