You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

February 5, 2016

Insider Trading: Time for Reform and Tougher Penalties

Subscribe to Updates
Bangkok Post, Corporate Counsellor Column

Recent headlines in Thailand and abroad have drawn attention to a spate of high-profile cases involving insider trading and the inadequate punitive action that follows. Many have called into question the efficacy of sanctions imposed by the Thai Securities and Exchange Commission (SEC) to deter insider trading. This article will look at the law surrounding insider trading in Thailand, how it is enforced, and whether the law is effective.

The Securities and Exchange Act

The Securities and Exchange Act of 1992 clearly prohibits trading on the securities exchange or an over-the-counter center directly or indirectly “in such a way as to take advantage of other persons by using information material to changes in the prices of securities which has not yet been disclosed to the public and to which information he or she has access by virtue of his or her office or position, and whether or not such act is done for his or her own or another person’s benefit, or to disclose such information so that he or she will receive consideration from the person who engages in the aforesaid act.”

The Act further defines an insider as:

  • a director, manager, person responsible for the operation, or an auditor of the company;
  • a person who holds more than 5 percent of the registered capital of the company;
  • a state agency personnel or director, manager or officer of the securities exchange, or an over-the-counter center who holds an office or position with access to information which is material to changes in the price of securities; and
  • any person involved in securities and/or trading securities in the securities exchange or an over-the-counter center.

Sanctions for insider trading include imprisonment for a term not exceeding two years and/or a fine not exceeding two times the benefit received or which should have been received but not less than THB 500,000.

The SEC also has the authority to order the offenders to deliver the benefit they gained from trading the securities within a six-month period from the date on which they gained access to the insider trading information.

The company may itself bring an action in court against directors and executives found in dereliction of their duties for disgorgement. A shareholder or shareholders, having the right to vote amounting to not less than 5 percent of the total voting rights of the company, may also issue a notice to the company to bring the action. If the company fails to bring an action within one month from the date of notice, the shareholder(s) may bring an action on behalf of the company.

Enforcement

The Act only has criminal penalties, and the SEC’s role is limited to the preliminary stage of investigation. The SEC determines whether to refer the matter to the Settlement Committee or police for criminal prosecution.

Offenses the SEC deems are compoundable and not far-reaching in effect are referred to the Settlement Committee, which has the authority to fine insider trading offenders criminally. The committee comprises three persons appointed by the finance minister, one of whom is an investigating officer under the Criminal Procedure Code. A case is regarded as settled once the offender has paid the fine within the specified period of time.

Offenses deemed noncompoundable or where settlement could not be reached or the matter has far-reaching social effect are referred to the police. The SEC does not have power to initiate criminal proceedings against wrongdoers in its own name—it must file a criminal complaint with the Royal Thai Police for further investigation, in accordance with the Criminal Procedure Code.

After the investigation is completed, the investigating officer will issue an opinion to the public prosecutor making a recommendation for or against prosecution. If the prosecutor decides to prosecute, the matter will go to trial. Only when the case is filed with the Criminal Court are the wheels of criminal justice set in motion.

How Effective Are the Laws?

The SEC tends not to pursue criminal proceedings due to the lengthy criminal process, which may not even result in prosecution if the prosecutor or court does not share the SEC’s views.

In fact, of the 47 insider trading cases reported by the SEC from 2009-15, only 8 criminal complaints were filed, while only two eventually went to trial. The Criminal Court imposed a fine of THB 1.25 million in one case and a jail sentence and fine in the other.

In the context of the recent increase in public awareness of this issue, there may be an impetus for hastening legal reform. The penalties for insider trading are currently inadequate, and urgent reform is needed to instill a greater sense of deterrence.

Download Full Article
Related Professionals

Practices

Banking and Finance

Corporate/M&A

Location

RELATED INSIGHTS​ 

August 27, 2026
The Bank of Thailand (BOT) is seeking public feedback on a proposed overhaul of the regulatory framework for licensed money changers authorized by the finance minister, under the Exchange Control Act, to buy and sell foreign banknotes separately from commercial banks and specialized financial institutions. The BOT published the draft principles on August 19, 2026, for public consultation, with comments accepted through September 18, 2026. If adopted in its current form, the new framework would substantially raise licensing standards, require existing licensees to undergo a review and upgrade process, temporarily freeze new applications in 2027, and reduce application intake rounds from 2028 onward, with significant implications for both existing operators and prospective new entrants. The overhaul initiative stems from the BOT’s recognition of a need to prevent the use of licensed money changers as channels for financial crime. The stated objectives are to build public confidence, ensure the safety of financial service users, and align the supervisory framework with the current risk profile of the business and evolving market conditions. Upgraded Licensing Standards The BOT intends to significantly revise the licensing framework, including requirements relating to registered capital, branch management, operational standards, and customer transaction limits. Detailed criteria have not yet been released and are expected to be subject to further consultation. All existing licensees will be required to upgrade to meet the new standards and submit evidence of compliance for BOT review on a case-by-case basis. Existing licensees that are unable to satisfy the upgraded requirements may face regulatory consequences, subject to the final framework and BOT review process. Freeze and Reopening The BOT will temporarily stop accepting new license applications throughout 2027 to focus resources on inspecting and upgrading existing money changers. Any party wishing to obtain a new money changer license must submit its application by
Read More
August 24, 2026
Myanmar’s Directorate of Investment and Company Administration (DICA) has published the guidelines it uses to assess and approve company names for registration in the country. The guidelines, which were published on May 18, 2026, explain how DICA determines whether a proposed name is identical or too similar to an existing name, and they identify words and expressions that may be prohibited or restricted. Businesses planning to incorporate in Myanmar should expect DICA to scrutinize proposed names more closely than it has in the past. Prohibitions on Company Names The Myanmar Companies Law prohibits company names that are identical or similar to existing company names, and DICA’s internal assessment guidelines explain how this rule applies in practice. Under the guidelines, DICA may reject a proposed company name if the proposed name: Is identical or nearly identical to an existing company name; Differs from an existing company name only in punctuation, capitalization, spelling, or transliteration; Only adds words such as “Group,” “Holding,” “International,” “Myanmar,” or “Family” to an existing company name; Merely rearranges the words in an existing company name; Is pronounced similarly to an existing name; Uses the same brand name as an existing company, even if the company carries out different business activities; or Uses an existing brand name together with an abbreviation of that brand name or a shortened form of the name or business description. DICA may also consider whether a proposed name could give the impression that two companies are related, even if they operate in different business sectors. In addition, DICA may review a company name even after registration. If it later determines that the name does not comply with the Myanmar Companies Law or is otherwise unsuitable, DICA may direct the company to change its name under section 26 of the Myanmar Companies Law.
Read More
August 20, 2026
Vietnam’s Law on Bankruptcy and Rehabilitation No. 142/2025/QH15, passed by the National Assembly on December 11, 2025, does something many regional counterparts do not yet attempt: it instructs parties and arbitral tribunals on exactly what happens to an arbitration once a debtor becomes insolvent. Together with the Law on Commercial Arbitration No. 54/2010/QH12, the new law improves upon what used to be an uncertain area of practice, now providing an explicit, mandatory sequence of procedures. Suspension and Termination of Arbitration Proceedings Under article 40(2) of the law, once a Vietnamese court accepts a bankruptcy petition, any arbitration that concerns the debtor’s financial obligations must be temporarily suspended as soon as the tribunal receives the court’s notification. If the court subsequently issues a decision commencing bankruptcy proceedings, article 59(2) takes a further step: the suspended arbitration is terminated outright, and the underlying case file is transferred to the court handling the insolvency for resolution. The two provisions work as a sequence: first suspension, then termination and transfer, rather than as independent triggers. Meanwhile, article 60(4) reinforces this effect by vesting the bankruptcy court with exclusive jurisdiction over all claims against the debtor from the date the petition is accepted. Notably, this mechanism operates automatically, without the need for the insolvency court to issue a separate anti-arbitration order. The tribunal simply suspends or terminates the proceeding by operation of law once notified; however, Vietnamese law currently provides no procedure by which a party can apply to the insolvency court for permission to continue the arbitration despite the statutory effect. Practitioners with a Vietnamese counterparty in arbitration should treat notification of a bankruptcy filing as something to flag to the tribunal immediately since continuing to arbitrate a claim that has become subject to article 40(2) or 59(2) risks producing an award vulnerable
Read More
August 20, 2026
Thai law contains no provision that speaks directly to what happens to an arbitration when one of the parties becomes insolvent. The interaction between arbitration and insolvency is derived instead from the general operation of two separately drafted laws: the Bankruptcy Act B.E. 2483 (1940) and the Arbitration Act B.E. 2545 (2002). Because Thai courts have had few opportunities to interpret how these two statutes apply together, the practical answer to many questions, such as who represents an insolvent party in arbitration, whether an award will be enforced, and what happens to a foreign proceeding, depends on inference from general principles of insolvency, arbitration, and procedural law rather than on settled rules. Liquidation and Restructuring The Bankruptcy Act governs both liquidation, which winds up a debtor’s affairs, and restructuring (rehabilitation), which aims to preserve a business. The consequences for arbitration differ accordingly. In liquidation, the debtor’s assets vest in the official receiver, who alone can conduct or continue any arbitration affecting the estate; the debtor loses the authority to act on its own behalf. In restructuring, the plan preparer or administrator takes over that role, but there is more room for the debtor to remain involved, since the objective of rehabilitation is to keep the business operational. Restructuring carries an automatic stay that takes effect once the Bankruptcy Court accepts the restructuring petition. This stay can halt an arbitration regardless of where it is seated. In contrast, liquidation does not work through a stay; instead, the debtor’s loss of authority over its own assets and disputes is what constrains the arbitration. Neither proceeding provides a party a formal route to apply for permission to continue arbitrating—the Bankruptcy Act contains no such mechanism—though in restructuring cases the Bankruptcy Court may allow proceedings to continue where doing so will not prejudice
Read More