The transfers would not have raised suspicion in themselves, but the two long-term employees were transferred on the grounds that their supervisory actions were "too strict" amid the sagging investment climate.

In an environment where authorities are being demanded to take serious action against wrongdoers to raise market profiles, this reasoning raises eyebrows.

Also, the reassignments have taken place at time when good governance is being pursued to assure investors of transparency and fairness and in a climate where strictness rather than compromise is honoured.

On July 1, shortly after Patareeya took charge, Sopawadee Lertmanuschai was transferred from the post of executive vice president of the SET to president of the Thailand Securities Depository. Her personality was reportedly "too aggressive", and she was considered "improper" for current stock-market conditions that require a supervisor who can "compromise".

Three months after Sopawadee's transfer, executive vice president Suthichai Chitvanich was moved from the Market Regulation Division to the Corporate Governance and Investment Relations Division. The reason given was that his supervision was too strict.

An SET source said high-ranking executives had not been satisfied with Suthichai's performance. The final straw that lost Suthichai his job was his order to prohibit net-settlement and margin-loan trading on Everland Plc shares for 30 trading days, from September 26 to November 7.

Everland shares had been trading in huge volumes with rising prices since September 21, the first trading date after the bloodless September 19 coup. The price of the company's stock increased Bt1.5 per share, or 29.7 per cent, to close at Bt6.55 with trading volume of Bt391.09 million on September 21, up from a closing price of Bt5.05 on September 19, when trading volume was just Bt32.82 million.

The stock's value continued to rise over the next three trading days. On September 25, Everland closed at Bt9.50 per share, up Bt1.85, or 24.18 per cent, from the previous day's trading, with volume as high as Bt652.32 million.

"Before taking such action [prohibiting net-settlement and margin-loan trading], Suthichai had been ordered not to enact any [control] measures on stocks while the coup was occurring, because it could destroy the investment climate and would have had a negative impact on the CDR [Council for Democratic Reform]," said the source.

Suthichai informed his superior of his plan to prohibit net-settlement and margin-loan trading on Everland shares and was told to let it go. However, he was forced to disobey his superior's command, because both price and trading volume of Everland stock had reached the "alert" criteria set by SET supervision standards. If Suthichai had not acted, he could have been blamed for negligence.

After he undertook the measures on Everland, Suthichai was transferred in an order dated last Wednesday and effective from this past Sunday.

SET president Patareeya told the press that the two transfers were part of an organisational restructuring in line with the stock exchange's three-year strategic plan, which begins next year.

"Corporate governance is an issue we would like to make come true, because surveillance would not be needed as much if listed companies and SET members followed corporate-governance practices. I would like to confirm the reshuffle is not a result of excessively stringent investigations into stock speculation," she said.

"I believe the workings of the department remain tight, because we have a strong system and a strong workforce in charge of tasks."

The market is anxious to know who will replace Suthichai, with a big question mark lingering over the SET's supervisory role. A man who strictly followed the rules has been punished, and thus a cloud of doubt has been raised on just how the SET is handling its good-governance practices.

Finance Reporters

The Nation