BANGKOK — Weak regulation of insider trading at CP All, a unit of CP Group, one of Thailand’s largest conglomerates and operator of the ubiquitous 7-Eleven convenience store chain, has sent shock waves through the local investment community.

Fueling the dismay was a statement issued Monday by auditors and independent directors at CP All saying that it is appropriate for the executives involved to retain their positions.

 Prinn Panitchapakdi, country head of CLSA Securities (Thailand), said securities’ watchdogs need more effective means to punish wrongdoing or Thailand is at risk of further incidents and a loss of global investor confidence.

“Foreign investors are clearly watching this issue because of their concern over corporate governance,” Prinn told the Nikkei Asian Review. He said that for any institutional investor corporate governance is “an extremely important component of the decision-making process — whether or not to invest in a company.”

 By Tuesday, CP All shares had fallen 12% since the case first surfaced in early December, outstripping the benchmark index’s 7% decline over the same period.

 The insider trading incident occurred in 2013, according to a statement by the Securities and Exchange Commission (SEC) on Dec. 2. Korsak Chairasmisak, the vice chairman of CP All, was at that time its chief executive. He bought over 118,000 shares of Siam Makro, a cash-and-carry chain, over a 12-day period ending on April 22 that year. The following day, CP All announced a tender offer for Siam Makro shares at 15% above the April 22 close. The regulator found that Korsak had prior knowledge of the deal and imposed a fine of over 30 million baht ($833,000). Three executives involved were also fined 3.1 million baht in total, but no criminal charges were brought.

CP All’s audit committee and independent directors, whose role includes providing oversight of executive conduct, in their statement said they had decided it was “appropriate for the individuals to continue in the businesses.”  Justifying the continued employment of the four executives, the statement cited the prior behavior and performance of the individuals concerned and their “exceptional skills and experience, which would be difficult to replace.”

Prinn said that both he and the public at-large know this statement is “against corporate governance standards,” and described it as a “serious offense of insider trading.” Prinn said the offenders should be removed from the board, but that this is “the regulator’s job, not the company’s.”

The present rules in Thailand only allow authorities to hand down fines to executives and not sanction their dismissal, and insider trading cases supposedly go unpunished even when not unnoticed.

Prinn said the case should be a turning point for the SEC leading to a “strengthening of the rules on insider trading.”