The head of the securities watchdog said this week that insufficient evidence made legal action difficult to bring following the

initial investigation by the

Stock Exchange of Thailand (SET) into any case of alleged manipulation.

"Stock-price manipulators are using more sophisticated tactics and it is hard to separate transactions that are either simple speculation or actual manipulation. Transactions are made through a number of stock-trading accounts and the amounts of each transaction are not significant. Moreover, their cash flow does not come from the same source," he said.

"In the past, we were able to bring charges because we could prove cash flow came from the same source, although we could not prove as to whether they were the same group." Manipulation is not unique to the SET. Malaysia suffers, too.

"Now the Malaysian stock market faces problems because it cannot penalise wrongdoers. We cannot stop stock-price manipulation although we have measures governing net settlement and margin-loan prohibitions and the turnover list. "Also, we have to be careful when filing complains because we have been sued," Thirachai said.

International Engineering took legal action against the SET claiming the exchange's ban on intra-day and margin-loan trading and a five-day suspension had hurt the company's recapitalisation plans. The Supreme Administrative Court dismissed the case.

Despite the difficulty in penalising manipulators, stock regulators have not been idle.

The SEC, the SET and

the Association of Securities Companies are working together to stop stock-price manipulation, he said.

The SEC has asked brokers to tighten credit and to monitor rumours. A pending SEC board restructuring will increase flexibility, Thirachai added. It will see the secretary-general and board members, including the chairman, nominated by a search committee and not appointed by the finance minister.

Board membership will be limited to three years, with three rights of renewal.

"The new structure will be implemented during my term, which is due to end at the end of next year, so I would be selected by the search committee if my term were extended.

"I believe the SEC is absolutely free from political intervention,"

he said.