Aug. 26--The Securities and Exchange Commission fined ING Funds 1.9 million baht yesterday and ordered its president, Maris Tarab, placed on probation for three years due to fiduciary violations regarding the management of the T.U. Dome Residential Complex Property Fund.

Mr Maris was also fined 231,750 baht, while Siam City Bank, as the trustee of the TU-PF fund, was fined 421,650 baht.

But Mr Maris denied any wrongdoing and said he would appeal the judgment.

"I have worked with good faith in the capital market for over 30 years. I am disappointed about what happened and I believe I did nothing wrong," he said.

The TU-PF fund, managed by ING Funds (Thailand), was launched in 2006 to invest in dormitories and serviced apartments to be built on land owned by Thammasat University (Rangsit Campus). After construction of the buildings, the fund was to lease the property from Thammasat for 30 years.

But the SEC said in a statement that the land to be leased to the fund had other owners as well, and that Mr Maris, as the fund manager, authorised payments of 173.5 million baht to the lessor and building contractor without seeking approval from unitholders.

The transaction resulted in risks for the fund if the other parties with rights to the land opposed the lease agreement with TU-PF, the SEC said.

The lease, worth 841.5 million baht, was also to be signed only after construction was complete. But the SEC said Mr Maris authorised five separate payments worth a total of 808.4 million baht to the contractor prior to the registration of the lease or completion of the buildings. The transactions represented a material change that should have been disclosed to unitholders, and added risk to the fund, the SEC said.

The SEC noted that ING and Mr Maris sought to minimise the risk to the fund, and on March 28, 2008, amended the contracts so a sole party was the lessor of the land to the fund. On Dec 26, 2008, the lease contract was signed between Thammasat and the fund. ING waived management fees for five months and agreed to reduce fees by half to 0.25 percent of net fund assets per year for 31 months.

Mr Maris said the cross-ownership was actually by Thammasat itself, and that an amendment was attached on the closing date for the 30-year lease.

He said the pre-payments to the contractor were in line with SEC rules, which permit funds to invest in a property before it is fully completed based on the authority of the fund manager.

Units of the fund closed yesterday on the SET at 9.40 baht, unchanged, in trade worth 470,000 baht.

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