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The 6 th International Conference on Financial Criminology Economic Crimes in the 21 st Century Supa Thamthitivat Director, Enforcement Department Securities and Exchange Commission, Thailand 5 th September 2014 Rangsit University, Thailand The views expressed in this presentation are those of the presenter and do not necessarily represent the opinion of the Securities and Exchange Commission, Thailand

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2 Regulatory Structure in Thai Capital Market Facts about Listed Company in Thailand Enforcement Program: Today and Future Recent Court Decision Agenda

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3 SECs Roles in Capital Market Market Development to Meet Economic Needs Market Integrity & Long-Term Sustainability Balancing Role Competitiveness Inclusive Growth Accessibility & Efficiency Investor Protection Fair & Orderly Market Reducing Systemic Risk

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Regulatory Structure in Thai Capital Market Company Law (MoC) Securities & Exchange Law (SEC) Exchange Rule (SET) General Welfare of Company Companys set up Shareholders rights Directors duties Companys book & record Raising Fund from Public Merit approval On-going disclosure Enhance good corporate governance Investor protection Listing on the Exchange Full, accurate and timely disclosure Fair, transparent and orderly market 4

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Three Wheels of Discipline in Capital Market Regulatory Discipline Market Discipline Self Discipline Prevention Monitoring Enforcement 5

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Mechanism Available SelfMarketRegulation Shareholders Meeting (Ordinary/Extraordinary) exercise voting rights ask director to answer or explain Company Disclosure Obligation Financial statement (quarterly/annually) Non-financial statement (annually) Others (upon major event) Right to Vote in Corporate Action which affects Company Fundamental Structure Related Party Transaction Procedures Auditors ReportPublic Notice Issued by Exchange or Regulator Opinion of Independent Director / Audit Committee Investing in company with good CG, Anti- Corruption Practice, etc. Shareholders Action Derivatives action Direct action Deterring Measures Trading Suspension Delist CG Awards Enforcement Tools Administrative Criminal 6

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Family businesses in Asia, 2011 India67% Phillippines66% Thailand66% Singapore63% Malaysia62% Indonesia61% Hong Kong, China62% South Korea58% Chinese Taipei35% China13% Source: Credit Suisse, 2011 Asian Family Businesses Report 7 Facts about Shareholders Structure in Thai Listed Company o Top 50 companies account for 76.5% of total market capitalization o Majority of companies listed on the Exchange are small/medium size o Average free float on the market is 47% (Only 139 companies have free float > 50%) o 66% of companies are family- controlled business Sources: Stock Exchange of Thailand

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Thailand Has Been Improved in Corporate Governance 8 CG Watch Market Scores: 2007 to 2012 200720102012 1. Hong Kong (67) 1. Singapore (69) 2. Singapore (65) 2. Hong Kong (66) 3. India (56)3. Japan (57)3. Thailand (58) 4. Taiwan (54)4. Thailand (55)4. Japan (55) 5. Japan (52)5. Taiwan (55)4. Malaysia (55) 6. Korea (49)6. Malaysia (52)6. Taiwan (53) 7. Malaysia (49)7. India (49)7. India (51) 8. Thailand (47)8. China (49)8. Korea (49) 9. China (45)9. Korea (45)9. China (45) 10. Philippines (41)10. Indonesia (40)10. Philippines (41) 11. Indonesia (37)11. Philippines (37)11. Indonesia (37) Sources : 1. ACGA, September 2012 2. World Bank Report on the Observance of Standards and Codes (ROSC): Corporate Governance Country Assessment Thailand, January 2013 3. Thai Institution of Directors (Thai IOD) CG ROSC Assessment: Thailands scores are above average in all area ASEAN CG Scorecard: Top 100 Thai listed company has the highest average score

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Enforcement Is the Area that Thailand Got the Lowest Score CG Watch Report 2012 Judicial process is inefficient, only a small percentage of criminal cases has filed in court when compare with the total number of complaints filed by the SEC to criminal authority No progress in the Civil Sanction Bill Concern on corruption issue 9

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Economic Crime in Capital Market Making false entry into books / records of company :- Hide bad debt; Create fake revenue; Manipulate the recognition of revenue/expense etc. Accounting Fraud Making materially false statement or omission of the material information :- Besides accounting figures, do not disclose ultimate beneficial owner of major shareholder or significant liability etc. False Disclosure Using the companys asset for personal benefit :- Create fake investment; Create sham transaction; Overpay in related party transaction etc. Corporate Fraud Trading in securities based on non-public, material information :- Information regarding companys financial status, dividend payment, M&A transaction etc. Insider Trading 10

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Current Public Enforcement Program Referral/Complaint SECs InvestigationEnforcement Action 11 o Exchanges surveillance o Auditors report o Publics complaints o Whistle blowers Sufficiency of power for info gathering Competency of officer Temporary freeze of asset Administrative Sanction Disqualify from serving as director/executive of listed company Suspend/Revoke its privilege to do business in capital market:- B-D; IA; FA; Auditor etc.) Criminal Action Out-of-Court Settlement Monetary penalty In-Court Action Rely on other criminal authorities Time consuming, in part, because of redundancy in info gathering Independence of opinion Level of expertise

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Deterring Transgressions Through Alternatives Positive Reinforcement Supervision of major transactions Private Enforcement Public Enforcement 12 o Using CG awards as incentives for companies to practice CG best practices such as AGM award, CG ranking and CG Scorecard o Revise CG best practices, guidelines, self assessment tools to raise standards o Closely supervise related party transaction and other major transaction o Revising RPT rules for more practical related party, role of audit committee and individual director, quality of professional opinion, quality of information for voting, etc. o Warning on possible abusive RPT and encourage Shareholders voting o Support roles of Thai Investor Assoc. o Urge for passage of Class Action Law o Push forward for enactment of Civil Sanction Law o Study the use of share repurchase as redress mechanism

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Recent Court Decision in A Criminal Case 13 Media Company (Listed on SET) Parent Company Held 50.83% shares CEO of Media Co. Held 44.82% shares Held 0.98% shares Commercial Bank Borrow 1,078 million Baht Guarantor Falsify documents of Media Co. submitting to bank No disclosure of guarantee liability

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Recent Court Decision in A Criminal Case (Continue) 14 In March 2009, CEO was charged with 17 counts of corporate fraud. CEO pleaded guilty during the midst of the trial. In February 2012, the Criminal Court sentenced CEO for 85 years in prison. Because of the guilty plead, the period of imprisonment was reduced in half to 42 years. However, under the Thai Criminal Code the maximum term for imprisonment is 20 years. So the final imprisonment term for CEO is 20 years. Defendant appealed. August 2014, the Appeal Court upheld the Criminal Courts decision. Late last month, Defendant filed a motion for Supreme Courts review.

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15 Thank You