The Securities and Exchange Commission (SEC) has intensified enforcement in the high-profile accounting scandal of Stark Corp, filing a criminal complaint and imposing a six-year ban on an auditor from Deloitte for serious professional misconduct.
The regulator filed a complaint with the Department of Special Investigation (DSI) against Nantawat Sumraunhant, a capital market auditor affiliated with Deloitte Touche Tohmatsu Jaiyos Audit Co Ltd, citing severe violations of auditing standards.
According to the SEC, Mr Nantawat failed to comply with auditing standards in a material and systemic manner during his audit of Stark and its subsidiaries.
These failures were deemed to have facilitated financial fraud and the manipulation of financial statements, the regulator noted.
The SEC revoked his capital market auditor licence and imposed a six-year ban, effective yesterday, during which any application for reinstatement will not be considered.
In July 2023, the regulator filed complaints with the DSI against Stark and 10 former directors and executives over alleged falsification of accounting records between 2021 and 2022.
Authorities found the company and its subsidiaries recorded false statements in financial documents, misled investors through bond offering filings and prospectuses, and concealed material facts in disclosure documents.
"The conduct was classified as fraudulent and deceptive, resulting in financial damage to investors," said the SEC statement.
The SEC's review of Mr Nantawat's auditing work covering financial statements from 2019 to 2021 identified critical deficiencies across several areas, including audit planning, risk assessment, analytical procedures, and audit opinion formulation.
Notably, the auditor failed to obtain sufficient and appropriate audit evidence for key accounts such as trade receivables, inventory, and revenue and cost of services. These shortcomings undermined the reliability of Stark's financial reporting.
FOLLOWING THE PROCESS
From a criminal perspective, the SEC determined that Mr Nantawat's actions contributed to enabling fraudulent activities and financial statement manipulation at Stark.
As a result, the regulator filed charges under the Securities and Exchange Act, referring the case to the DSI for further investigation and potential prosecution.
From an administrative standpoint, the SEC concluded the misconduct constituted a severe breach of auditing standards, warranting the revocation of his capital market auditor licence.
The enforcement automatically disqualifies Mr Nantawat from serving as an approved auditor, reinforcing the regulator's zero-tolerance stance on professional negligence.
"Filing the complaint marks the beginning of the criminal justice process. Determinations of guilt will depend on investigations by authorities, prosecutorial decisions, and ultimately the judgement of the courts," noted the SEC.
The regulator reaffirmed its commitment to monitor the case and cooperate fully with relevant agencies to ensure effective enforcement of capital market laws.
In response to a Bangkok Post request, Deloitte previously stated it was awaiting the court's decision on the case. During the legal proceedings, the auditor remains an employee of the firm but has been "placed on inactive status".
The SEC said the case underscores its aggressive enforcement approach in restoring confidence in Thailand's capital markets following one of the country's most significant corporate scandals.
By taking decisive action against audit failures and financial misconduct, regulators aim to reinforce transparency, accountability and investor protection, key pillars for rebuilding trust and ensuring long-term market stability, noted the statement.
