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SEC penalizes an investment consultant for non-compliance with an investor’ order



Friday 6 March 2020 | No. 45 / 2020


Bangkok, 6 March 2020 – SEC has suspended approval for an investment consultant for complex instruments named {A} for one month and 15 days for failing to comply with an investor’s order.

Following the investor’s complaint and SEC’s further investigation, it was found that on 11 October 2018 during the trading hours of the Derivatives Exchange, a client of {A} sent an order to close the position of derivatives contract with SET50 underlying at-the-open (ATO) price as soon as the trading session began.* However, since the client sent the order after the trading had already begun, {A} could not execute the ATO order in time and decided to execute the order at the market price (MP) instead without notifying the client in advance. As a result, the client received less profits from the order.   

SEC views that {A}’s act did not comply with the investor’s order and was deemed failure to perform duties with responsibility and deliberation as a professional**. SEC has therefore suspended the approval as investment consultant for complex instruments type 1*** for one month and 15 days, effective from 9 March 2020.  

SEC emphasizes the importance for investment consultants to comply with investors’ orders. In the event that such compliance cannot be done, investment consultants must inform investors immediately and must not make a trading decision without investors’ acknowledgment or consent.  

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Notes:

* At-The-Open order (ATO) is an order to buy or sell securities at the session’s opening price. Trading orders of this kind are sent during pre-open sessions, either in the morning or afternoon.  

** Pursuant to Clause 23(2) and the prohibited characteristics of personnel in the capital market business under Clause 31(1) of the Notification of the Capital Market Supervisory Board No. Tor Lor Thor. 8/2557 Re: Rules on Personnel in the Capital Market Business dated 3 June 2014, as amended by the Notification of the Capital Market Supervisory Board No. Tor Lor Thor. 48/2560 Re: Rules on Personnel in the Capital Market Business (No. 7) dated 30 August 2017.  

*** An investment consultant for complex instruments type 1 is allowed to give advice to investors about capital market products without complex features and products with high risks or complexity of all types. Ex., investment units of mutual funds for institutional investors or ultra-high net worth investors, investment units of mutual funds investing in derivatives, hybrid products, structured notes and derivatives. 












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No. 45 / 2020 Friday 6 March 2020
SEC penalizes an investment consultant for non-compliance with an investor’ order
Bangkok, 6 March 2020 – SEC has suspended approval for an investment consultant for complex instruments named {A} for one month and 15 days for failing to comply with an investor’s order.

Following the investor’s complaint and SEC’s further investigation, it was found that on 11 October 2018 during the trading hours of the Derivatives Exchange, a client of {A} sent an order to close the position of derivatives contract with SET50 underlying at-the-open (ATO) price as soon as the trading session began.* However, since the client sent the order after the trading had already begun, {A} could not execute the ATO order in time and decided to execute the order at the market price (MP) instead without notifying the client in advance. As a result, the client received less profits from the order.   

SEC views that {A}’s act did not comply with the investor’s order and was deemed failure to perform duties with responsibility and deliberation as a professional**. SEC has therefore suspended the approval as investment consultant for complex instruments type 1*** for one month and 15 days, effective from 9 March 2020.  

SEC emphasizes the importance for investment consultants to comply with investors’ orders. In the event that such compliance cannot be done, investment consultants must inform investors immediately and must not make a trading decision without investors’ acknowledgment or consent.  

_________________________

Notes:

* At-The-Open order (ATO) is an order to buy or sell securities at the session’s opening price. Trading orders of this kind are sent during pre-open sessions, either in the morning or afternoon.  

** Pursuant to Clause 23(2) and the prohibited characteristics of personnel in the capital market business under Clause 31(1) of the Notification of the Capital Market Supervisory Board No. Tor Lor Thor. 8/2557 Re: Rules on Personnel in the Capital Market Business dated 3 June 2014, as amended by the Notification of the Capital Market Supervisory Board No. Tor Lor Thor. 48/2560 Re: Rules on Personnel in the Capital Market Business (No. 7) dated 30 August 2017.  

*** An investment consultant for complex instruments type 1 is allowed to give advice to investors about capital market products without complex features and products with high risks or complexity of all types. Ex., investment units of mutual funds for institutional investors or ultra-high net worth investors, investment units of mutual funds investing in derivatives, hybrid products, structured notes and derivatives.