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​ 

September 9, 2026
Certain securities, derivatives, and treasury activities in Thailand were opened to foreign investors when Thailand’s Ministry of Commerce published two new ministerial regulations in the Government Gazette on August 28, 2026. The regulations significantly broaden the service activities that foreign-owned businesses may conduct without a license or certificate under the Foreign Business Act B.E. 2542, as amended (FBA). Securities and Derivatives Business Exemptions Prior to the issuance of these ministerial regulations, the exemptions covered (1) securities brokerage and derivatives brokerage with their only underlying assets being agricultural commodities, financial instruments, and securities; and (2) dealers, advisers, and fund managers conducting derivatives business under Thailand’s derivatives laws. The ministerial regulations provide broader exemptions. In addition to derivatives under the laws on derivatives as before, the following two major categories are provided: Derivatives whose underlying assets or variables fall outside the scope of Thailand’s laws on derivatives. This addresses a gap in the previous framework, which did not comprehensively exempt derivatives tied to nonregulated underlying assets or variables, such as certain commodities. Foreign brokers, advisors, and fund managers can now facilitate a broader range of hedging and risk management instruments without triggering FBA licensing requirements. Derivatives traded outside a derivatives exchange, or over the counter (OTC), whose payments are calculated by reference to foreign exchange rates or interest rates. This removes an FBA licensing barrier for foreign providers of widely used OTC hedging products, broadening the solutions available to importers and exporters managing currency exposure and to borrowers seeking greater certainty over financing costs. The ministerial regulations also exempt brokers and agents handling transactions involving either of these two derivatives categories. For securities businesses, the ministerial regulations add exemptions for margin loans used to purchase securities and for securities repurchase transactions. These additions clarify whether such activities qualify as exempt brokerage
Read More
September 4, 2026
Foreign business restrictions on telecommunications, treasury center businesses, and intragroup support services were eased when Thailand published the Ministerial Regulation Prescribing Service Businesses Not Requiring Permission for Foreign Business Operations (No. 5) B.E. 2569 (2026) in the Government Gazette on August 28, 2026. The ministerial regulation expands the categories of service businesses that foreign investors may operate without a foreign business license (FBL) under the Foreign Business Act B.E. 2542 (1999) (FBA). Of particular relevance to the telecommunications, fintech, and technology sectors, the ministerial regulation exempts: Type 1 telecommunications licensees, which do not have their own networks; Treasury center businesses operated in accordance with Thailand’s exchange control regulations; and Certain intragroup administrative, human resources, and information technology management services. Telecommunications Services Foreign-owned businesses providing telecommunications services under a type 1 telecommunications license may now operate without obtaining an FBL. This may streamline market entry for qualifying telecommunications and digital infrastructure businesses. The exemption applies only to the FBA licensing requirement. Operators must continue to comply with applicable requirements under the Telecommunications Business Act and the regulations of the National Broadcasting and Telecommunications Commission, and the change does not affect foreign ownership restrictions applicable to type 2 or type 3 telecommunications businesses. Treasury Center Businesses The ministerial regulation also exempts qualifying treasury center businesses from the FBL requirement. This may facilitate centralized treasury functions in Thailand, including liquidity management, foreign exchange management, and intragroup funding arrangements. Treasury center operations remain subject to applicable requirements of the Bank of Thailand and other competent authorities. Intragroup Administrative, HR, and IT Services Certain administrative, human resources, and information technology management services provided between affiliated entities are also exempt, provided the relevant entities satisfy prescribed ownership or management criteria. The exemption is available where the service provider and recipient are related through specified ownership
Read More
September 1, 2026
Thailand has taken another step toward liberalizing its foreign business framework, exempting additional service activities and derivatives brokerage or agency businesses from the licensing requirements of the Foreign Business Act (FBA). Since the FBA came into effect, Thailand has taken a measured approach to opening its economy to foreign investment. While the FBA regulates foreign participation in businesses that may affect domestic interests, the framework has also evolved to allow foreign participation in certain business activities where sector-specific laws and regulatory frameworks already provide sufficient oversight, making additional FBA restrictions unnecessary. This is particularly true where Thai businesses are sufficiently capable of competing in certain service sectors, or where liberalization is intended to facilitate the provision of services among companies within the same corporate group. Against this backdrop, two new ministerial regulations have been issued pursuant to the FBA. Service Businesses Under the FBA Under the FBA, certain categories of business are restricted for foreign operators. List 3 of the FBA sets out businesses that foreigners may operate only if they obtain a foreign business license (FBL) or a foreign business certificate (FBC), or unless a specific exemption applies. List 3 (21) covers “other service businesses,” which is a catch-all provision that captures a wide range of service businesses not specifically enumerated elsewhere in the FBA. In practice, this means that most service activities carried on by foreigners in Thailand require an FBL or FBC unless otherwise exempted. Notwithstanding the foregoing, the FBA provides a mechanism to address this breadth by empowering the Minister of Commerce to issue ministerial regulations excluding specific types of service businesses from List Three (21). Once a service business is so excluded, foreigners may operate it without obtaining an FBL or FBC. Prior to the new regulations, four ministerial regulations had been issued to
Read More
August 31, 2026
Thailand has introduced a new regulatory framework that may expose foreign nationals who violate the Foreign Business Act (FBA) to deportation. The Regulation of the Office of the Prime Minister on Deportation B.E. 2569 was published in the Government Gazette on August 27, 2026. The regulation establishes an administrative process for referring foreign nationals for deportation where this is deemed necessary in the interests of public order or public morality. It does not create new substantive deportation powers, but it expressly identifies unlawful business conduct under the FBA—including nominee arrangements—as grounds for referral. Grounds for Deportation Referral The regulation sets out five grounds that may give rise to a referral to the relevant authorities: Unlawful entry into, or unlawful stay in, Thailand in violation of immigration laws. Unlawful employment or engagement in work in violation of laws governing the employment of foreign nationals. Carrying on business in violation of the FBA, including through the use of nominee arrangements. Forging official documents or using forged official documents. Committing an offense punishable by imprisonment of five years or more. The framework takes a broad approach, extending not only to the perpetrators of these acts but also to those who facilitate, instigate, or otherwise support such acts. Deportation Risk Following a Criminal Judgment Where a foreign national has committed any of the above offenses and has fully served the sentence imposed pursuant to a final judgment, the interior minister has the power to order deportation. This power also applies where a court has issued a final judgment sentencing a foreign national to imprisonment but has suspended the execution of the sentence, or has imposed a fine. A deportation order may also specify a period during which the foreign national is prohibited from reentering Thailand. FBA Noncompliance: Broader Consequences Noncompliance with the FBA—including
Read More