Bangkok, 16 September 2016 ? The National Legislative Assembly has approved the new amendments to the Securities and Exchange Act (SEA), which aim to enhance enforcement efficiency by amending the offences regarding  market misconduct, and introducing civil penalty as an alternative sanction. 

Assistant Secretary-General Sakkarin Ruamrangsri said: ?The nature of market misconduct has become more complicated, and for the most part the existing laws do not cover all new ways of committing an offense in the capital market. Legal provisions applied to some cases are unclear and open to interpretation. Moreover, the existing laws may be impractical for capital market misconduct whereby important evidence is usually in the possession of the offenders contrary to other criminal cases that leave more traces for investigation. Given such circumstances and the fact that criminal procedure takes a long time, it has been difficult to bring a market misconduct offender to justice.?

The approved amendments contain provisions that clarify and specify elements of the offences regarding market misconduct and increase enforcement measures to improve efficiency and compliance with international standards.

The key points of the amendments are summarized accordingly:

(1) Market Misconduct: categorizing the characteristics of misconduct to be clearer and applicable to wrongful acts of different natures, into four groups, namely:
 1.1 Disclosure of information liable to causing damage to investors and capital market. This includes disseminating information or make a statement that is false or misleading in a material particular, providing an investment analysis or a forward looking statement based on false or distorted data. It is imperative that the persons who give information or opinions to the public be strictly cautious and accountable for their own action. However, forward looking statements based on actual, not distorted facts available at the time, is permissible even though the outcomes afterward turn out to differ from those anticipated; 
 1.2 Misuse of inside information. Any person who has access or possesses inside information (insider) must not seek unfair advantage of other investors or tip such information to another person (tippee) who also must not seek unfair benefits or forward the information to any subsequent person. By law, it is initially presumed that an insider (e.g., director or executive) who trades company securities or derivatives while material information has not been disclosed publicly engages in insider trading. Likewise, any person who has a close relationship with an insider (e.g., close relative) and engages in irregular trading while the company has not disclosed the inside information, shall be deemed to have engaged in insider trading as well. In addition, it is illegal for intermediaries or their employees to use advance information on clients? trading orders of securities or derivatives to execute their own orders before clients? (front running), or disclose such information for other persons to do the same;
 1.3 Market Manipulation, divided into two types, namely (i) executing trading orders to mislead other persons about the price or trading volume of securities, and (ii) executing trading orders on a continued basis to create the price or trading volume of such securities to be inconsistent with normal market condition. The amendments specify more efficient procedures for proof of guilt committed by a group of persons which is usually the case with market manipulation;   
  1.4 Supervision of exchange-based trading to maintain continuity and reliability of the Stock Exchange of Thailand (SET) trading system. Any person, who knows or ought reasonably to know that placing of orders to a trading system may create the price or trading volume of securities to be inconsistent with normal market condition and cause disruption or delaying the functioning of the trading system of the trading venue, is liable to violation of the Securities Law. In addition, the amendments contain provisions related to the use of a nominee account or allowing one?s trading account to be used as such in the commission of a market misconduct offense.

(2) Civil Penalties: The civil penalty is introduced as an alternative sanction for offenses that could affect the overall creditability and transparency of the capital market. This includes market misconduct, disclosure of false information or non-disclosure of material facts that could influence investment decisions, failure of directors or executives of listed companies to perform fiduciary duties and using or allowing other persons to use a nominee account to engage in market misconduct. The civil penalty begins with the SEC?s submitting the case to the Civil Penalty Committee to approve commencing civil penalty proceedings against the alleged offender The Civil Penalty Committee shall consist of enforcement and financial experts, namely the Attorney-General as Chairperson, the Permanent Secretary of the Ministry of Finance, the Director-General of the Department of Special Investigation, the Governor of the Bank of Thailand and the Secretary-General of the SEC. With consent of the Civil Penalty Committee to commence the civil penalty proceeding, the SEC will bring an action against the alleged offender in the Civil Court. However, before filing a civil case, the alleged offender may agree to enter into a settlement agreement under the terms imposed by the Civil Penalty Committee. When the alleged offender has paid for the fine penalty in full according to such agreement, the right to institute the civil proceeding and criminal prosecution shall be extinguished.

?The new amendments have been considered by relevant parties in many sectors to ensure that the provisions are appropriate and applicable to the increasingly complicated nature of misconduct in the current market environment. Apart from market misconduct and civil penalty, there are additional provisions related to issuance of new types of securities and fund mobilization by foreign issuers,? said Mr. Sakkarin.

The amendments which have been approved by the National Legislative Assembly and the Cabinet will take effect after His Majesty the King?s royal endorsement and publication in the Government Gazette.