Opened 46 manipulated accounts, no illegal income
The State Securities Commission (SSC) has just issued a decision to impose an administrative fine of VND1.5 billion on an individual, Ms. Le Thi Hai Binh (Hanoi). She is banned from trading for 2 years due to her violation of stock market manipulation.
According to the conclusion, from August 22, 2018 to June 15, 2021, Ms. Binh used 46 accounts including 1 of her own and 45 accounts of 34 investors to continuously buy and sell shares of APG Securities JSC (APG) to create fake supply and demand, manipulating APG stock prices.
Despite the manipulation for nearly 3 years, the conclusion shows that Ms. Le Thi Hai Binh did not have any illegal income.
This also means that Ms. Binh manipulated stocks but did not profit from the above violations.
The fine of 1.5 billion VND is also the highest for an individual and the 2-year trading ban is also a preventive measure to prevent violations of the law on securities and the securities market for Ms. Binh.
However, the question is why did Ms. Binh use 46 accounts to manipulate stocks for such a long time?
And who benefits from the above violations? Does Ms. Binh have any relationship with the leaders and shareholders of the company?
Recent reports show that Ms. Binh has no relationship with the Chairman, General Director, and members of the Board of Directors of APG Securities.
The price movement of APG shares on the market during the period when Ms. Binh manipulated was remarkable. The share price increased sharply from 2,800 VND to nearly 6,700 VND/share. Along with the vibrant market movements that followed, APG shares even reached nearly 21,000 VND/share in early 2022.
After that, the stock plummeted, returning to VND2,600/share in November 2022. Recently, APG has increased sharply again, currently at nearly VND7,900/share (ending session on June 6).
Stock manipulation without illegal profits occurs quite a lot in the market.
In early November 2022, the State Securities Commission fined Ms. Vu Thi Ngoc Anh (Thai Nguyen) VND 550 million for using 20 accounts to continuously buy and sell shares of Dong A Hotel Group Corporation (DAH), creating fake supply and demand, and manipulating DAH shares. Ms. Anh was also confirmed to have no illegal profits from committing the violation.
Or recently, on April 13, the State Securities Commission administratively fined Mr. Doan Ba Hong (Hai Duong) 550 million VND for using 24 accounts to trade, create fake supply and demand, and manipulate shares of Construction Joint Stock Company 1369 (C69).
The inspection results showed that Mr. Hong's violations did not include any illegal profits.
What is the purpose of manipulation?
Mr. Luu Chi Khang, Director of CSI Securities Research Center, said that the violations could have many different purposes. Not to profit from the manipulated accounts, but the purpose could be to anchor high-priced stocks to help use as collateral for loans.
“This is called creating liquidity and holding stocks for a long time,” Mr. Khanh shared.
According to this expert, stock prices are often fixed not by natural supply and demand, but simply by exchanges between "left and right hands".
In fact, strong price movements can also give an advantage to insiders who are able to grasp/guess price movements. Or an advantage can be given to those who are privy to the information.
In the case of APG, the stock price increased by 2.4 times during the period when Ms. Le Thi Hai Binh manipulated the stock and increased by 8 times shortly after. This is an increase that can bring great profits if anyone can grasp the trend of this stock price. Of course, some people may suffer heavy losses when the stock price later plummets (from the beginning of 2022) back to the level of 2,600 VND/share in November 2022.
Besides the manipulation cases where “there was no illegal profit”, there were some cases where illegal profit was identified and the violators were criminally prosecuted. However, these cases were not as numerous as the cases of Trinh Van Quyet (illegally profiting hundreds of billions of VND), Do Thanh Nhan (profiting more than 154 billion VND), Do Duc Nam...
In fact, many cases of stock market manipulation have been exposed but violations still occur. The level of punishment seems not to be enough of a deterrent and may be the cause of the current situation of lawlessness.
Recently, a representative of the State Securities Commission said that the agency is focusing on researching and including in the Securities Law the enhancement of sanctions. The Securities Law 2019 has stipulated a very high penalty level compared to the general level, with a maximum of VND 3 billion for organizations and VND 1.5 billion for individuals who violate the law. Recent market developments show that this penalty level has not met practical requirements.
According to the State Securities Commission, in 2022, the Ministry of Finance deployed many inspection teams for securities codes showing signs of unusual transactions; conducted transaction analysis for securities codes...
This agency has administratively sanctioned 495 organizations and individuals for violations with a total fine of more than 39 billion VND and applied additional sanctions to 6 cases, and applied remedial measures in 15 cases.
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