CP All Pressured By Investors to Take Action on Insider Trading

  • Thai fund managers call for executives to be replaced
  • SEC's fine undermines attempts to crack down on graft

Thai fund managers overseeing more than $172 billion in assets agreed on Thursday to freeze investments in billionaire Dhanin Chearavanont’s CP All Pcl until the operator of 7-Eleven convenience stores takes action against executives charged with insider trading.

“The agreement on freezing of investments in CP All’s equity and debt securities has been anonymous because of corporate governance concerns,” Voravan Tarapoom, president of the Association of Investment Management Companies, said at a briefing after a meeting in Bangkok. “On the question whether they will reduce investments further, this will depend on the decision of each mutual fund and pension fund.”

The AIMC along with Thailand’s two largest pension fund managers is seeking a replacement of those fined by the Securities & Exchange Commission. The nation’s market regulator had in December fined executives at CP All and True Corp. a combined 33.3 million baht ($930,000), saying they used non-public information to profit from the purchase of shares in Siam Makro Plc. Investors and the nation’s corruption watchdog said the penalty was too lenient and that the case had highlighted flaws in Thailand’s regulations while undermining efforts to combat graft.

CP All this month pledged to appoint independent external experts to review its corporate governance structure, though it took no action against the executives because of their “previous track records of ethical practice and immediate compliance and settlement with the SEC,” according to a statement.

“As the manager of public money, we put very high emphasis” on corporate governance at all the companies it invests in, Chavinda Hanratanakool, chief executive officer of Krung Thai Asset Management Co., said at the same briefing. “We wish the coordinated actions will have an influence on the company.”

The SEC fined CP All’s Vice Chairman Korsak Chairasmisak in December, along with Piyawat Titasattavorakul and Pittaya Jearavisitkul, both of whom are directors on the company’s board. Athueck Asvanund, vice-chairman and general counsel at True Corp., the mobile-services arm of Dhanin’s Charoen Pokphand Group, was also fined. Korsak said last month that he bought shares in cash-and-carry wholesaler Siam Makro while CP All was negotiating its purchase, but didn’t intend to commit insider trading.

Shareholder Meeting

Shares of CP All slid 18 percent in the October-December period, the biggest quarterly drop since the company listed in 2003, according to a data compiled by Bloomberg. The stock has gained 3.8 percent this year, compared with a 0.4 percent advance for the benchmark SET Index.

Representatives of the AIMC, Social Security Office and Government Pension Fund met on Thursday to discuss their action against CP All. AIMC is a trade group of all mutual fund companies in Thailand with total assets of about 4 trillion baht, according to its website. The Social Security Office manages about 1.4 trillion baht in pension funds for private companies’ employees, while the Government Pension Fund has about 717 billion baht in assets.

The institutions, many of which still own shares in CP All, will also raise the corporate governance issue in the company’s next shareholder meeting, according to Voravan.

Kriengchai Boonpoapichart, CP All’s head of investors relation department, declined to comment when reached by phone at his office.

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