The Securities and Exchange Commission (SEC) has suspended Asia Wealth Securities Co (AWS) from doing business as of yesterday for alleged use of clients' money to pay for share settlements without their consent.
Following the SEC's instruction, the Stock Exchange of Thailand (SET) suspended trading of stocks through AWS. It recommended AWS clients transfer their stocks to accounts with other securities firms to resume trading.
If clients do not have accounts with other brokers, they can transfer the money via Issuer Account 600 of the Thailand Securities Depository. After opening an account at a securities company, shares can be transferred from Account 600 to trade.
On Thursday, the SEC said it found AWS had spent money from clients' accounts for unauthorised share purchases. The sum amounted to 157.99 million baht. The regulator ordered AWS to return the money to clients by Sunday.
"This could cause great damage to clients. The suspension order remains in effect until the money is returned," said the SEC statement.
SEC secretary-general Ruenvadee Suwanmongkol said yesterday AWS asked the regulator to investigate instances where customers' money was used to pay for share settlements, with the SEC already starting the process.
"We found customers' money had been misused and the SEC is in the process of collecting evidence. Initially, it was a violation of SEC law to use customers' money without their consent," she told a press conference.
Ms Ruenvadee said AWS is the only brokerage penalised in this case thus far, though the probe is ongoing.
If the SEC determines the investigation involves enforcement beyond its authority, it will forward the case and evidence to other agencies, she said.
The regulator is investigating suspicious trading of shares of More Return Plc (MORE), a company listed on the Market for Alternative Investment (MAI) that operates in the energy, water and property sectors.
Trading of MORE shares was suspended on Monday after the SET noticed suspicious trades on Nov 10-11.
SET president Pakorn Peetathawatchai said yesterday the damage caused by the suspicious transactions was estimated at 10 million baht, which is still small compared with the stock market's total capitalisation.
"I think it's a kind of cheating, as securities companies were unable to react because they did not expect such an incident would occur. I want investors to have confidence that all relevant parties are working on this problem and preparing additional measures to prevent similar events from happening in the future," said Mr Pakorn.
The SET is collecting evidence to be sent to the Anti-Money Laundering Office and the Economic Crime Suppression Division (ECD), based on their request.
Both agencies have the authority to verify financial routing and relationships between various transactions, he said.
Pichet Sithi-Amnuai, president of the Association of Securities Companies, told reporters it is still unclear whether AWS took customers' money to pay for the purchase of MORE shares.
"Nobody can answer what they do with clients' money," he said.
For the MORE stock trades, the SEC has coordinated with the ECD and other agencies to gather evidence quickly. The SEC has also been working with the SET to improve monitoring of newly listed companies.
"We can say the SEC has closely monitored companies under its supervision. All securities firms are maintaining the net capital rule as required. It is difficult to identify a brokerage that has a weak financial status now," said Ms Ruenvadee.
In a related development, NCL International Logistics Plc informed the SET yesterday the company cancelled a plan to acquire a 60% share of AWS's registered capital. On Nov 4, NCL signed a share purchase agreement with AWS, which is in the process of complying with various requirements and has not yet transferred AWS shares.
"Considering that AWS has been temporarily suspended from operating by the SEC, it may pose a risk to the company's investment. Therefore, the board of directors approved the cancellation of the investment and the share purchase agreement of AWS," said NCL.
