- The company paid an inappropriate bonus to branch managers according to the company's financial performance from January to June 2002.
- The company retroactively altered the remuneration scheme several times and for an extended period of time for 21 marketing officers for their performance from February to April 2002. Such alterations were construed as unreasonably inappropriate actions and have been done to exploit the schemes to provide the highest remuneration to the said marketing officers.
- As part of an incentive scheme, the company overpaid the marketing officers by more than 25% of the brokerage or agent fees that they actually generated. There are three cases as follows:
- The company permitted a transfer of remuneration from three marketing officers to three other officers retroactively, whilst the beneficiaries did not actually handle the accounts generating the transferred incentives.
- The company permitted a transfer of portfolios and trading transactions from 13 marketing officers to 13 other marketing officers, whilst the beneficiaries did not actually handle the accounts transferred.
- The company permitted a branch manager to transfer a major customer's portfolio of the branch to two marketing officers, one at a time, from the 14th of January to the 28th of February 2002 and from March to June 2002. The said officers received the remuneration from such account for the branch manager, whilst they did not actually handle the account.
- From February to April 2002, the company paid other benefits to customers under the care of the 13 marketing officers in the form of entertainment disbursements that were not an ordinary course of business. For example, there were five receipts dated on the same date and issued from the same place. In addition, there were entertainment expenditures being disbursed to the same customers; most of the receipts were issued from the same place.
- As for the executives responsible for overseeing these matters, who must be held accountable under Article 27 of the regulations, the Sub-committee held that they failed to supervise the company's operations in a prudent manner, especially in the cases of the other benefits given to the customers in the form of entertainment disbursements that were not an ordinary course of business and the disguised portfolio transfer by the branch manager to other marketing officers to obtain the above-restricted remuneration.
Mr.Kittiratt said that "By virtue of Articles 18, 25, 27 and 28 of the aforementioned regulations, the Sub-committee has passed a resolution to fine the company 5,000,000 baht. Pending the determination of the punishment for the three executives involved in the other benefits given to the customers and the branch manager transferring the major customer's portfolio to the marketing officers. Should the executives be involved in any further violation within 60 days after the notification from the SET, they shall be dismissed as per Article 27 of the regulations."
Moreover, the company is required to punish the marketing officers involved in the cases as follows.
- Prohibit one branch manager from performing duties as a branch manager, a marketing officer and a trader for 90 days.
- Prohibit the 13 marketing officers from performing duties as marketing officers and traders for 60 days.
- Prohibit one marketing officer from performing duties as a marketing officer and a trader for 45 days.
However, the persons in 1 to 3 above are also traders as per Article 28(1) of the regulations. In this capacity, they are placed on probation, or in case they no longer work at the company, they still will be punished as per Article 28(1) for the same period mentioned above.
Furthermore, the Sub-committee resolved that the company and those involved in the following operations should note that the company shall operate strictly in compliance with the SET's rules and regulations, especially in the following cases:
- The company did not report to the SET the remuneration, via sign on bonus, to the marketing officers coming from another securities company from late December 2001 Such inaction was not in compliance with the resolution of the Member's meeting on December 2001.
- The company pays compensation to the marketing officers handling institution clients by employing a computation method that may be considered a pool method.
- The company shall supervise the performance of marketing officers in any circumstance that may be construed as other benefits to a customer.
The company is also required to enjoin the persons involved as follows:
- The six executives involved in the offenses shall strictly supervise and review the operation of the company in compliance with the SET's rules and regulations.
- The twenty-eight marketing officers shall strictly comply with the SET's rules and regulations, especially in the transfer of portfolios and trading transactions.
- The two marketing officers shall strictly comply with the SET's rules and regulations. In particular, they shall not conduct any action that may be construed as another benefit to a customer.
The SET has informed KGI Securities (Thailand) Plc. of its ruling. The company has recognized the ruling of the Sub-committee and will not appeal it. The company also added that its policies are to adhere strictly to the SET's rules and regulations, but this misconduct occurred at the initial phase of the SET's launch of this new rule. Therefore, the company did not understand the regulation completely and misinterpreted some of its finer points. The company will ask its executives and its auditing unit to monitor internal operations and auditing measures so they are in line with regulations of the Securities and Exchange Commission and the SET.
