The Stock Exchange of Thailand plans to tighten market supervision to restore investor confidence after unusual trading in a mid-size company’s stock led to regulatory sanctions against a local brokerage.
Trading in More Return Pcl, which led to the stock being suspended, involved an unanticipated “rare fraud incident”, Pakorn Peetathawatcha, the stock exchange’s president, said Friday. His comments came after Thailand’s Securities & Exchange Commission on Thursday temporarily suspended Asia Wealth Securities Pcl’s operations for allegedly using clients’ funds without their consent.
“We are assessing our weaknesses and loopholes to prevent any repeat of this incident,” said Pakorn. “This is a wakeup call for more improvement and strengthening.”
Thailand’s regulator and authorities are probing transactions of More Return stock that reportedly led to more than 4 billion baht (US$111 million) of payment defaults by an investor to several brokerages. Trading of More Return shares has been suspended since Monday by the bourse.
Asia Wealth’s suspension was due to violations involving the use of client funds, Ruenvadee Suwanmongkol, the SEC’s secretary general, said separately Friday. The regulator is also investigating whether the brokerage breached any other rules, she said. Reunvadee and bourse chief Pakorn separately declined to comment whether Asia Wealth’s breach was linked to More Return’s transactions.
Asia Wealth is unable to submit customers’ buying and selling orders after the regulator’s suspension and will work to reinstate transactions as soon as possible, according to a statement on its website dated Thursday. Still, customers can withdraw cash and transfer their shares via the firm’s normal channels, it said. Calls to Chanachai Joonjiraporn, the chief executive officer of Asia Wealth, weren’t immediately answered.
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Several securities brokerage firms filed police complaints against a More Return investor, who defaulted on paying for shares bought last week, the Bangkok Post reported yesterday, adding that an investigation into the transactions is now underway.
Asia Wealth’s suspension for violating trading rules is an “isolated case” and other brokerages are able to continue operating as usual, according to the stock exchange’s Pakorn.
More Return’s stock posted a two-day slide of 51% through Nov. 11, before it was suspended. The company now has a market value of 9.42 billion baht, according to data compiled by Bloomberg.
