SEC needs power to prosecute insider traders

Although the Securities and Exchange Commission (SEC) is rightly receiving plaudits over fines it levied on directors of a high-profile public company for insider trading, your editorial correctly identifies this as a crime that is rarely punished in Thailand, despite its prevalence through the widespread use of nominees. 

The SEC rarely embarks on criminal prosecutions of insider traders and usually settles for imposing fines that amount to a disgorgement of profits plus a penalty in proportion to profits. In such cases, habitual insider traders fined for only one in a series of offences are likely to come out well ahead. In addition, Thai society attaches no shame to the offence, and companies are usually willing to retain directors and other executives fined for the crime, seemingly viewing it as no more serious than a parking ticket.

Since its humiliating defeat in the Sia Song case many years ago, the SEC seems to have shied away from criminal prosecutions. Though understandable, given the current legal structure and the commission’s limited resources, this policy needs to be changed urgently if attitudes to insider trading are to be rectified. 

The SEC Act needs to be amended to make the definition of insider trading abundantly clear to the courts, and penalties need to be stiffened in line with those of more developed financial centres. Most importantly, the SEC needs to be given its own powers of prosecution, like the National Counter Corruption Commission, to allow it to bypass the police and the Office of the Attorney General and take cases straight to the criminal courts.

Seeing high-profile insider traders serving time in prison is the only thing that will change attitudes. The case of TV celebrity-businesswoman Martha Stewart, who went to jail in the US for a relatively trivial insider-trading offence (which didn’t even involve her own company), is instructive here.

George Morgan