SEC Secretary-General addresses investor concerns over governance and fraud prevention
Recent enforcements by the Securities and Exchange Commission of Thailand (SEC) against owners and executives of listed companies have raised widespread concerns about corporate governance in Thailand’s capital market and its impacts on investor confidence.
One of the frequently asked questions the SEC has received is how the regulator will ensure that such fraudulent activities will not happen again.
There are also inquiries about the measures to prevent frauds and protect stakeholders in the market.
SEC Thailand Secretary-General Pornanong Budsaratragoon suggests that these issues of concerns can be viewed through the “Fraud Triangle” theory, which consists of three components as follows:
1. Motive: Fraudsters’ motivation can stem from various factors, such as greed or pressure to gain rapid growth.
2. Opportunity: Fraud can occur when there is an easy pathway or system for it, even enticing those who have never committed fraud before.
3. Rationalization: Fraudsters often believe that they won’t get caught or are too big to fail, thus their fraudulent actions are insignificant compared to their other contributions.
To minimize the chances of fraud, the SEC focuses on enhancing internal control processes within listed companies. This includes emphasizing the role of the "Three Lines of Defense": executives, directors, and independent directors, who all have a responsibility to prevent fraud within their organizations.
The SEC also aims to strengthen the roles of gatekeepers, such as auditors and credit rating agencies, ensuring they operate professionally and adhere to international standards.
Furthermore, the SEC and the Stock Exchange of Thailand (SET) are committed to monitoring more than 800 listed companies, employing advanced technologies for fraud detection to improve the effectiveness of their oversight.
Enforcement is another crucial role of the SEC. We are dedicated to prosecuting wrongdoers and ensuring that everyone, regardless of their status, is held accountable. This demonstrates the SEC’s commitment to upholding the law and discouraging fraud, which is vital for the sustainable growth of all sectors in the capital market.
In summary, while the SEC cannot control the motivations of potential fraudsters, it can and does strive to minimize opportunities for fraud and strictly enforces the law. The SEC, along with its staff and all executives, is committed to maintaining investor confidence and ensuring that Thailand’s capital market supports the country’s economic growth.
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