Although Vietnam’s current Securities Law includes severe penalties, the number of stock price manipulation cases is increasing, causing great damage to the market and frustration for investors.

According to Vietnam Association of Financial Investors (VAFI) vice-chairman Nguyen Hoang Hai, the recent case of FLC Group’s chairman Trinh Van Quyet arrested for alleged stock manipulation is just one among numerous other violations in the stock market.

“The key problem was that the current management and supervision of the market regulators, as well as the State Securities Commission [SSC], has not been effective enough,” Hai told Vietnam News Agency.

Many countries around the world have a model of a securities commission, whose leaders came from different units within the state agencies. The commission had independent leaders such as the chairman, secretary-general, and permanent members, Hai said.

“However, the current model of Vietnam’s State Securities Commission is a single-leader model, so decisions on personnel, inspection, supervision, and licensing are made by only one leader. Unlike the other models around the world now, licensing and post-testing processes are made by two different leaders. In my opinion, it is necessary to have reforms at the Vietnam State Securities Commission,” said Hai.

According to the new Securities Law, the supervision over the stock market has covered three levels, from securities companies, the Stock Exchange to the SSC.

An SSC representative said that this supervision was a regular and continuous practice, so signs of abnormal trading of stocks were monitored very closely.

The SSC would conduct unexpected inspections when detecting signs of law violations by organisations and individuals, especially signs of market manipulation, he said.

Stocks with unusual trading movements were always closely supervised by many agencies, across many levels. If detecting signs of violations, the commission would conduct or co-ordinate with functional agencies to inspect and handle violations according to the law, he said.

If stock manipulation activities are not detected early, the illegal profits of the violators will become very large.

Although the authorities have detected and handled many violations on information disclosure on the market, most of them were just administrative sanctions. Since most of the fines are small amounts, many large shareholders are willing to trade off fines for profits.

Just a few cases have been brought to criminal trial.

At the beginning of 2022, the Investigation Police Agency under the Ministry of Public Security was investigating acts of creating fake supply and demand, manipulating the share prices of SANA WMT JSC, now named ASA JSC (ASA).

Based on the results of the investigation, it was found that Nguyen Van Nam, former director of ASA JSC, had created fake documents to falsely increase seven million ASA shares, equivalent to 70 billion dong ($3 million), listing seven million shares of ASA on the Hanoi Stock Exchange (HNX) for sale and illegally collected money.

The investigative police agency then issued a decision to prosecute a criminal case, arrest Nam and accused him for the charge of fraud and appropriation of property.

Previously in August 2020, the Hanoi People’s Court heard the case of fraud to appropriate property and manipulate CDO stock prices by defendant Nguyen Van Giang, born in 1981, former director of Dong A Bank Securities Co, Hanoi branch.

Defendant Giang directed some employees to open 70 different accounts at 24 securities companies. The defendant directly used these accounts to apply margin trading, guarantee late payment, or borrow money from other individuals to get money to buy and sell CDO shares to create liquidity and push up the share prices of CDO.

As a result, 572 investors suffered losses of 11.2 billion dong, in which 33 investors claim damages amounting to 1.8 billion dong.

The Hanoi People’s Court sentenced defendant Nguyen Van Giang to 17 years in prison for fraud to appropriate property and three years in prison for manipulating securities prices.

In May 2020, the Hanoi People’s Court also opened a first-instance trial of the case of stock market manipulation that occurred at Binh Thuan Mineral and Industry JSC (KSA).

In this case, a number of defendants were sentenced to prison. The court sentenced Pham Thi Hinh, born in 1975, former chairman of the Board of Directors of KSA, to 18 months in prison.

Three defendants, Nguyen Anh Tuan, born in 1981, residing in Vinh Tuy ward, Hai Ba Trung district, Hanoi; Tran Hong Ngoc, born in 1981, residing in Ngo Thi Nham ward, Hai Ba Trung district; and Nguyen Trong Hung, born in 1979, residing in Hang Bong ward, Hoan Kiem district, also received suspended 15-month sentences, with probation time of 30 months for the same crime of manipulating the stock market.

Previously, on May 7, 2019, the Hanoi People’s Court opened the first-instance trial of the case of manipulating securities prices, fraudulently appropriating assets, by defendant Tran Huu Tiep, former chairman of the Board of Directors of the Central Mining and Mineral Import Export JSC (MTM) and 14 accomplices.

This is the first case brought to trial by the Hanoi People’s Court on the act of manipulating securities prices.

The court sentenced defendant Tran Huu Tiep to life imprisonment for the crime of “fraudulent appropriation of property”. For the same crime, two defendants Vu Thi Hoa and Nguyen Le Truong received 12 years in prison. Bui Thien Ly and Do Huu Tai were both sentenced to 30-month suspended sentences by the court, with a probation period of five years.

VIET NAM NEWS/ASIA NEWS NETWORK