SEC warns asset firms against misleading promotions

“Most stimulus promotions were found from large asset management companies owned by commercial banks. We’re worried that could |open a new, distorted dimension of savings, as it does not direct people |in the right way to save,” Chalee Chantanayingyong, deputy secretary-general of the SEC, said last week.
“Investment should come from savings, not money derived from credit cards. The SEC has issued a warning to them. But the companies said that this [promotion] is the policy of their parent commercial bank, so the SEC plans to discuss with the central bank about this matter as this could ruin the overall industry,” he said.
Late this year, all asset management companies plan to draw out their marketing strategies with promotions, particularly for credit cards to make purchases, to encourage people into buying investment units, he said.
The regulator is concerned that such promotions could be investment guidance that was misleading investors, instead of deepening their knowledge and understanding.
It has been about a year that investment units have been sold through promotions. The SEC discussed this with the Association of Investment Management Companies for the cooperation of its members to understand their business and how to compete.
The problem could derail the AIMC’s plan to become a self-regulating organisation (SRO), which is expected to start next year, as some asset management companies got the idea that the SRO was forced on them by the SEC. The SRO could not become a reality if the asset management companies were not ready for it.
“Our SRO never really took off. This is particularly for the exercise of power, as personal benefit could not be eliminated. Being an SRO means that the SEC transfers some parts of supervision to them to relieve some pressure on the SEC,” he said.
The SEC is insisting on its planned schedule for commission liberalisation next year despite the Association of Securities Companies’ demand for a postponement.
There were rumours that brokerages would arrive at an agreement or negotiate a commission rate, but the market mechanism will finally set the commission according to costs.
Next year could see more mergers and alliances. Some securities companies have come in to discuss planned mergers, he added.