The SEC’s New Weapons In The Fight Against Market Manipulators

Preventing market manipulation is key to maintaining the credibility of capital markets.  Insider trading, wash trading, churning, and pumping and dumping are just a few of the types of manipulation regulators need to attack in order to ensure that capital markets are transparent and efficient.  Thailand’s Securities and Exchange Commission (SEC) is no stranger to market manipulation, but until recently it has faced battles against such activity relatively unarmed.  The most common weapon available to the SEC was the threat of criminal prosecution for manipulators, which could take months if not years to resolve and prove taxing on the SEC’s limited manpower and capital.

Under recent amendments to Thailand’s Securities Exchange Act of 1992, the SEC’s arsenal of weapons against market manipulation has been greatly enhanced.  The amendments main focus is on market manipulation and include a new civil penalty for wrongdoers, with the understanding that a civil penalty will prove to be a more efficient and flexible weapon for the SEC compared to the more burdensome process of instituting criminal proceedings.  Under the amendments, wrongdoers now face a penalty equal to triple the benefits they receive from their activity (an increase from double the benefits prior to the amendments).  According to the SEC’s assistant secretary-general in an article published in the Nation, the SEC would take action against anyone found to have breached the laws on market manipulation, such as tippees, and not just executives or insiders of listed companies.  Other penalties for market manipulation include imprisonment as well as bans on trading and from becoming a director of a listed company.