Securities: Thai SEC prosecutes former UBS employee

Numkrit, Pawaris Phatwongsathon, Meena Kamphaengkaew, Patara Thumrongvit, Chalalai Saliwattana, Duangduean Limsuthapoch and Rosathorn Kittikuntanasan are all charged with offences under sections 313 and 315 of the Securities and Exchange Act 1992 or aiding and abetting the commission of those offences.

The SEC says its investigation " stemmed from a referral from the Stock Exchange of Thailand identifying suspicious trading behaviours of a UBS employee who was responsible for executing securities trading for or on behalf of its clients, all of which are institutional clients.

"According to the SEC findings, during the period from 5 January 2009 to 13 October 2009 Numkrit – then assistant director of UBS International Equity Sale responsible for providing brokerage services to local and foreign institutional clients – dishonestly used the information regarding clients’ trading orders he had accessed by virtue of his duty and ran a fraudulent scheme whereby the orders of UBS’s clients would match with those of his conspirators.

"In doing so, the UBS’s clients did not receive the best price available on the market but had to pay more or sell for less. On the contrary, Numkrit and his associated persons were not exposed to any market risk and gained profits from every transaction they entered into in connection thereof."

The scheme involved more than 600 transactions with a trading volume of more than 3,000 million bhat and producing approx 37 million bhat profits, says the SEC.

"For the sale side, Numkrit sold the securities owned by UBS’s clients to his conspirators at the price less than the best bid available on the market by placing it through the big lot board or the foreign board. The securities were then immediately resold at the best price available on the main board. This was always higher than its acquisition price. The buy side would occur in the opposite direction. Instead of buying securities for UBS’s clients at the best offer available on the SET main board, Numkrit made an arrangement with the conspirators who bought the securities at the best price available on the market and then flipped it back to sell to UBS’s clients at a higher price by putting through the big lot board or the foreign board," the SEC explains.

The group exploited weaknesses in UBS Securities systems and controls and as a result the company has been instructed to review and improve its procedures for monitoring suspicious transactions, the SEC says.

The authorisation of Numkrit, Chalalai, Duangduean and Rosathorn have been revoked and they arebanned from engaging in or associating with any securities or derivatives business firm.