Stock selling scandal, shareholders flee

The Investigation Police Agency of Dong Nai Province Police has just issued a decision to prosecute and an arrest warrant to temporarily detain Nguyen Khanh Hung, born in 1978, Chairman of the Board of Directors (BOD), legal representative of LDG Investment Joint Stock Company (LDG) for the crime of "Deceiving customers".

Mr. Nguyen Khanh Hung was prosecuted while Dong Nai Provincial Police expanded the investigation into the case of "Abusing position and power while performing official duties" that occurred in Doi 61 commune, Trang Bom district, Dong Nai province related to the Tan Thinh residential area project invested by LDG Investment Joint Stock Company.

Accordingly, from 2018 to 2020, LDG constructed hundreds of villas and townhouses even though the competent State agency had not carried out procedures for land allocation, land lease, permission to change land use purpose, and had not been granted a construction permit to carry out project investment and construction.

LDG has also signed principle contracts to buy and sell houses with dozens of customers and earned hundreds of billions of dong.

Sold 2.6 million LDG shares illegally, fined 500 million VND

Before being temporarily detained and prosecuted for the above incident, Mr. Nguyen Khanh Hung was also known in the stock market but mostly for scandals, including the case of illegally selling millions of LDG shares.

Specifically, on August 17, the Ho Chi Minh City Stock Exchange (HOSE) announced that this agency decided to completely cancel the transaction of selling more than 2.6 million LDG shares made on August 15, 2023 by Mr. Nguyen Khanh Hung, Chairman of the Board of Directors of LDG Investment Joint Stock Company.

The reason for the cancellation is because Mr. Hung traded stocks but did not report or disclose information before making the transaction as required by law.

Mr. Hung was later fined more than 500 million VND. After the Chairman's illegal sale, LDG shares fell to the floor for 3 consecutive sessions and many investors suffered losses.

chutichldgnguyenkhanhhung cf.gif — *LDG Chairman Nguyen Khanh Hung.*

From a price of about 6,400 VND/share, LDG is now at 3,700 VND/share. At its peak in early 2022, LDG was priced at 25,000 VND/share.

According to the explanation, Mr. Nguyen Khanh Hung “sold illegally” because of the secretary’s mistake. Specifically, from August 8-15, he was on a business trip away so he could not directly make the information announcement. Instead, he assigned the secretary to make the information announcement, but because the new staff did not fully understand the regulations, it led to mistakes, delaying the information announcement process.

LDG sinks into losses and shareholders flee

The time when Mr. Hung secretly sold LDG shares took place in the context of this stock price recovering, increasing nearly 50% compared to the beginning of the year.

Although the stock price has increased, this company has poor business results, with quarterly revenue of only a few hundred million VND and continuous losses. This company has also been unable to hold general meetings of shareholders due to insufficient participation rate as prescribed.

Mr. Nguyen Khanh Hung also suffered a scandal when he was one of the bosses whose shares were continuously sold off.

At the end of 2022, Mr. Hung held nearly 18.6 million LDG shares, equivalent to 7.25%. In April, this tycoon was sold off more than 3.5 million LDG shares. On May 18-19, Mr. Hung was sold off nearly 5 million shares by a securities company. After the transaction, Mr. Hung's share ownership ratio at LDG decreased from 5.86% to 3.92%, officially no longer a major shareholder at LDG.

Since May, LDG has been embroiled in a scandal with the news of prosecution for the illegal construction of nearly 500 houses at the Tan Thinh Residential Area project in Dong Nai province, of which LDG is the investor.

According to the financial report, by the end of 2022, the inventory of Tan Thinh residential area project was 463.5 billion VND, accounting for 38.4% of LDG Investment's total inventory. This is the project with the largest inventory value of this enterprise.

The shareholder structure at LDG has also changed dramatically over the past 8 years.

LDG Investment JSC was established by changing its name from Long Dien Real Estate JSC in 2015. Its charter capital increased from VND 50 billion to VND 750 billion and was listed on the Ho Chi Minh City Stock Exchange.

In 2016, Le Ky Phung, Chairman of the Board of Directors and founder of LDG, withdrew. Mr. Phung was replaced by Mr. Nguyen Khanh Hung, who was then a member of the Board of Directors and Deputy General Director of Dat Xanh Real Estate Services and Construction JSC (currently Dat Xanh Group).

Since then, Dat Xanh has been the largest shareholder group at LDG Group. Since then, LDG Group has always been considered the shadow of Dat Xanh Group. Since 2017, LDG has entered the apartment segment in Ho Chi Minh City when launching apartment projects under the Intela brand such as Saigon Intela, High Intela and West Intela. There are also projects in neighboring provinces.

However, in mid-2020, Dat Xanh Group (DXG) suddenly divested from LDG. DXG decided to sell all of its nearly 63 million shares, equivalent to 26.27% of its capital at LDG. At the same time, DXG's subsidiary, Ha Thuan Hung Construction Trading Service Co., Ltd., also registered to sell all of its more than 25 million LDG shares, equivalent to 10.45% of LDG Investment's charter capital. In total, Dat Xanh shareholders sold 88 million LDG shares, equivalent to 36.72% of LDG's charter capital, and suffered a loss of about VND500 billion.

The new secretary's mistake caused LDG Chairman Nguyen Khanh Hung to be fined more than half a billion VND. Mr. Nguyen Khanh Hung, Chairman of the Board of Directors of LDG Investment JSC, was fined more than 520 million VND for not announcing the sale of 2.6 million LDG shares.

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