1. The 6th International Conference on Financial Criminology
“Economic Crimes in the 21st Century”
Supa Thamthitivat
Director, Enforcement Department
Securities and Exchange Commission, Thailand
5th September 2014 Rangsit University, Thailand
The views expressed in this presentation are those of the presenter and do not necessarily represent the opinion of the Securities and Exchange Commission, Thailand

2. Agenda Regulatory Structure in Thai Capital Market
Facts about Listed Company in Thailand
Enforcement Program: Today and Future
Recent Court Decision

3. SEC’s Roles in Capital Market
Balancing Role
Market Development to Meet Economic Needs
Market Integrity & Long-Term Sustainability
Competitiveness
Investor Protection
Inclusive Growth
Fair & Orderly Market
Accessibility & Efficiency
Reducing Systemic Risk

4. Securities & Exchange Law (SEC)
Regulatory Structure in Thai Capital Market
Company Law (MoC)
Securities & Exchange Law (SEC)
Exchange Rule (SET)
General Welfare of Company
Company’s set up
Shareholder’s rights
Director’s duties
Company’s book & record
Raising Fund from Public
Merit approval
On-going disclosure
Enhance good corporate governance
Investor protection
Listing on the Exchange
Full, accurate and timely disclosure
Fair, transparent and orderly market 4

5. Regulatory Discipline
Three Wheels of Discipline in Capital Market
Regulatory Discipline
Market Discipline
Self Discipline
Prevention
Monitoring
Enforcement

6. Mechanism Available Self Market Regulation
Shareholder’s Meeting (Ordinary/Extraordinary)
 exercise voting rights
 ask director to answer or explain
Company Disclosure Obligation
 Financial statement (quarterly/annually)
 Non-financial statement (annually)
 Others (upon major event)
Right to Vote in Corporate Action which affects Company Fundamental Structure
Related Party Transaction Procedures
Auditor’s Report
Public Notice Issued by Exchange or Regulator
Opinion of Independent Director / Audit Committee
Investing in company with good CG, Anti-Corruption Practice, etc.
Shareholder’s Action
 Derivatives action  Direct action
Deterring Measures  Trading Suspension  Delist
 CG Awards
Enforcement Tools  Administrative  Criminal

7. Facts about Shareholder’s Structure Family businesses in Asia, 2011
in Thai Listed Company
Family businesses in Asia, 2011
India
67%
Phillippines
66%
Thailand
Singapore
63%
Malaysia
62%
Indonesia
61%
Hong Kong, China
South Korea
58%
Chinese Taipei
35%
China
13%
Top 50 companies account for % of total market capitalization
Majority of companies listed on the Exchange are small/medium size
Average free float on the market is % (Only 139 companies have free float > 50%)
66% of companies are family controlled business
Sources: Stock Exchange of Thailand
Source: Credit Suisse, 2011 “Asian Family Businesses Report”

8. Thailand Has Been Improved in Corporate Governance
CG Watch Market Scores: 2007 to 2012
2007
2010
2012
1. Hong Kong (67)
1. Singapore (69)
2. Singapore (65)
2. Hong Kong (66)
3. India (56)
3. Japan (57)
3. Thailand (58)
4. Taiwan (54)
4. Thailand (55)
4. Japan (55)
5. Japan (52)
5. Taiwan (55)
4. Malaysia (55)
6. Korea (49)
6. Malaysia (52)
6. Taiwan (53)
7. Malaysia (49)
7. India (49)
7. India (51)
8. Thailand (47)
8. China (49)
8. Korea (49)
9. China (45)
9. Korea (45)
10. Philippines (41)
10. Indonesia (40)
11. Indonesia (37)
11. Philippines (37)
CG ROSC Assessment: Thailand’s scores are above average in all area
ASEAN CG Scorecard: Top 100 Thai listed company has the highest average score
Sources: 1. ACGA, September 2012
2. World Bank – “Report on the Observance of Standards and Codes (ROSC): Corporate Governance Country Assessment – Thailand, January 2013
3. Thai Institution of Directors (Thai IOD)

9. Enforcement Is the Area that Thailand Got the Lowest Score
CG Watch Report 2012
Judicial process is inefficient, only a small percentage of criminal cases has filed in court when compare with the total number of complaints filed by the SEC to criminal authority
No progress in the Civil Sanction Bill
Concern on corruption issue 9

10. Economic Crime in Capital Market
Accounting Fraud
Making false entry into books / records of company :- Hide bad debt; Create fake revenue; Manipulate the recognition of revenue/expense etc.
False Disclosure
Making materially false statement or omission of the material information :- Besides accounting figures, do not disclose ultimate beneficial owner of major shareholder or significant liability etc.
Corporate Fraud
Using the company’s asset for personal benefit :- Create fake investment; Create sham transaction; Overpay in related party transaction etc.
Insider Trading
Trading in securities based on non-public, material information :- Information regarding company’s financial status, dividend payment, M&A transaction etc.

11. Current Public Enforcement Program
Administrative Sanction
Disqualify from serving as director/executive of listed company
Suspend/Revoke its privilege to do business in capital market:- B-D; IA; FA; Auditor etc.)
Exchange’s surveillance
Auditor’s report
Public’s complaints
Whistle blowers
Referral/Complaint
SEC’s Investigation
Enforcement Action
Criminal Action
Out-of-Court Settlement  Monetary penalty
In-Court Action
Rely on other criminal authorities
Time consuming, in part, because of redundancy in info gathering
Independence of opinion
Level of expertise
Sufficiency of power for info gathering
Competency of officer
Temporary freeze of asset

12. Positive Reinforcement Supervision of major transactions
Deterring Transgressions Through Alternatives
Using CG awards as incentives for companies to practice CG best practices such as AGM award, CG ranking and CG Scorecard
Revise CG best practices, guidelines, self assessment tools to raise standards
Warning on possible abusive RPT and encourage Shareholder’s voting
Support roles of Thai Investor Assoc.
Urge for passage of Class Action Law
Positive Reinforcement
Supervision of major transactions
Private Enforcement
Public Enforcement
Closely supervise related party transaction and other major transaction
Revising RPT rules for more practical “related party”, role of audit committee and individual director, quality of professional opinion, quality of information for voting, etc.
Push forward for enactment of Civil Sanction Law
Study the use of share repurchase as redress mechanism

13. Recent Court Decision in A Criminal Case
Held 44.82% shares
Parent Company
CEO of Media Co.
Held 0.98% shares
Held 50.83% shares
Media Company (Listed on SET)
Guarantor
Borrow 1,078 million Baht
Guarantor
Commercial Bank
Falsify documents of Media Co. submitting to bank
No disclosure of guarantee liability

14. Recent Court Decision in A Criminal Case (Continue)
In March 2009, CEO was charged with 17 counts of corporate fraud.
CEO pleaded guilty during the midst of the trial.
In February 2012, the Criminal Court sentenced CEO for 85 years in prison.
Because of the guilty plead, the period of imprisonment was reduced in half to 42 ½ years.
However, under the Thai Criminal Code the maximum term for imprisonment is 20 years. So the final imprisonment term for CEO is 20 years.
Defendant appealed.
August 2014, the Appeal Court upheld the Criminal Court’s decision.
Late last month, Defendant filed a motion for Supreme Court’s review.

15. Thank You