‘Justice delayed is justice denied.” This turn of phrase perfectly captures the current state of Thailand’s capital markets, where cases of stock manipulation and insider trading have repeatedly eroded investor confidence.

Despite the enormous financial damage caused by these scandals, enforcement remains frustratingly slow. It often takes years for cases to be resolved, creating the perception that financial misconduct is a low-risk, high-reward activity where wrongdoers can enjoy their illicit gains long before they ever face the consequences, if they do at all.

This raises the question of whether Thailand’s capital markets regulatory system is strong enough to deter market abuse.

The TDRI analysed publicly available data on stock market misconduct cases handled by the Securities and Exchange Commission of Thailand (SEC) from 2018 to 2024. Of the 46 cases of unfair securities trading, 40 involved stock price manipulation or insider trading, with most offences occurring between 2017 and 2019. Such findings highlight the ingrained and systemic nature of violations. The other six cases involved false information disclosure and front-running transactions.

Instead of pursuing criminal prosecutions, which require extensive evidence and lengthy legal proceedings, the SEC has increasingly relied on civil penalties as a faster means of enforcement.

Before civil penalties were introduced in 2016 as part of the SEC’s securities law reforms, criminal prosecution convicted offenders in about 5% of stock market misconduct cases. The introduction of civil penalties significantly improved the ability to enforce financial regulations and bring wrongdoers to justice.

Over the past seven years, nearly 80% of cases were resolved through fines, amounting to 696 million baht. The civil penalties streamline enforcement and avoid the slow-moving criminal courts.

However, their effectiveness in deterring misconduct remains questionable.

One of the most pressing issues is the lengthy delay in enforcement. On average, criminal cases took about 381 days for the SEC to process from the initial wrongdoing to the official penalty announcement, excluding time spent in the courts. Civil penalty cases took even longer, dragging on for 1,523 days, or more than four years.

Worse still, the delay in the civil penalty process gets worse. In 2018, cases resolved through civil fines took an average of 519 days, but by 2024, that figure had surged to 2,050 days.

This prolonged judicial process raises serious concerns about the effectiveness of enforcement. Delays not only weaken deterrence, but they have also emboldened wrongdoers to profit from misconduct for years before facing any consequences. Meanwhile, investor confidence erodes as unresolved cases linger, sending the wrong message that market manipulation isn’t a serious crime.

Equally troubling are light financial penalties that are considered too low to deter any wrongdoers. Under the current Securities Act, if the SEC cannot determine how much profit a wrongdoer gained from illegal trading, the fine ranges from just 500,000 to 2 million baht. Only if illicit profits can be calculated and confirmed at all, the maximum fine is twice the amount of financial gain.

In practice, fines are often lower than the ill-gotten profits, making market manipulation and insider trading a calculated risk worth taking. In cases where the SEC could not determine illicit profits, some offenders were fined as little as 500,000 baht. However, in similar cases where financial gains were estimated, the average illicit profit was 2.2 million baht, with a median of 850,000 baht. This means that even when caught, many offenders still walked away with a net gain.

Thailand’s penalties pale in comparison to those of other countries. In Malaysia, Singapore, and the United States, fines can reach up to three times the illicit profit.

With major scandals shaking Thailand’s capital markets, the SEC has signalled its intention to toughen enforcement and push for stronger regulations. To clean up the markets and deter new wrongdoings, the SEC needs to strengthen its ability to investigate cases more efficiently by securing faster access to financial transaction data. This requires stronger coordination with the Anti-Money Laundering Office (Amlo), the Department of Special Investigation (DSI), and commercial banks.

Many stock market misconduct cases involve complex webs of financial transactions and multiple actors, and delays in obtaining crucial banking records often slow down enforcement. Lessons can be learned from Thailand’s task force model used to combat call centre scams, which successfully improved inter-agency cooperation and response times.

At the same time, penalties must be raised to match the scale of financial wrongdoing. The law should ensure that fines are at least equal to the illicit profits gained – if not higher. Increasing the maximum penalty to three times the illegal gain, in line with the best regional and global practices, would send a strong signal that market misconduct will not be tolerated.

Restoring investor confidence in Thailand’s capital market requires more than just tax incentives and stimulus measures to attract capital inflows. Financial stimulus may help, but it will do little to restore confidence if investors believe the market is rigged.

Speeding up enforcement, strengthening penalties, and improving regulatory coordination are not just technical fixes; they are essential steps towards restoring trust. It’s time to get tougher.

Writer: Tippatrai Saelawong is Senior Researcher, Thailand Development Research Institute (TDRI). This article is part of the Capital Market Regulatory Guillotine Project by TDRI

First Published:  Bangkok Post Mar 26, 2025