Some organizations and individuals colluded to open multiple securities accounts to cross-buy and sell, creating fake supply and demand for several stocks over a long period of time, but only a few cases were criminally prosecuted. The majority of cases were not detected or prevented; if any, they were only administratively sanctioned, which was not enough of a deterrent.

Shocking incidents

On August 5, the trial of Trinh Van Quyet and his accomplices officially ended with Mr. Quyet being sentenced to 3 years in prison for "Stock market manipulation" and 18 years in prison for "Fraudulent appropriation of property".

Before this trial, in 2023, the Hanoi People's Court brought to trial the case of stock market manipulation against Do Thanh Nhan (former Chairman of the Board of Directors of Louis Holdings Joint Stock Company) and 7 accomplices. Accordingly, Do Thanh Nhan was sentenced to 5 years and 6 months in prison for "Stock Market Manipulation" (reduced to 4 years in early 2024).

Both cases were exposed in 2022, causing a stir in the stock market at that time. Thousands of investors suffered heavy losses when the related stocks plummeted. Since then, many cases of stock market manipulation and creating fake supply and demand have been discovered and punished by authorities.

Recently, the State Securities Commission (SSC) fined 4 individuals 1.5 billion VND each for using 26 accounts to continuously buy and sell PSH shares of Nam Song Hau Petroleum Investment Trading Joint Stock Company to create fake supply and demand, manipulating stock prices for a long time, from February 1, 2021 to May 27, 2022. These people include: Mr. Mai Huu Phuc, Ms. Vo Nhu Thao, Ms. Do Thuy Tien and Mr. Tran Minh Hoang.

Another individual, Mr. Nguyen Viet Ha, was also fined VND1.5 billion by the State Securities Commission and banned from securities trading for 2 years for manipulating the stock market. Mr. Ha was also banned from holding positions at securities companies, securities investment fund management companies, branches of foreign securities companies and fund management companies in Vietnam, and securities investment companies for a period of 2 years.

According to the State Securities Commission, Mr. Ha opened 23 accounts to continuously buy and sell GKM shares of Khang Minh Group Joint Stock Company. This action was to create fake supply and demand, manipulating GKM stock prices for 8 months (from August 2, 2021 to January 28, 2022).

In addition, from November 2023 to January 2024, the State Securities Commission also fined 3 individuals, including Mr. Nguyen Huu Duc, Mr. Ngo Huynh Minh Uy and Mr. Luu Thai Hai, each 1.5 billion VND and banned securities trading for 2 years for stock market manipulation. Notably, all 3 individuals manipulated the stock code FIR of First Real Estate Joint Stock Company continuously for many months.

In particular, Mr. Nguyen Huu Duc used his own account and 75 accounts of 21 investors to continuously buy and sell, trade FIR shares. Mr. Luu Thai Hai and Mr. Ngo Huynh Minh Uy used 76 securities accounts to continuously buy and sell, trade between accounts to create fake supply and demand, manipulating FIR stock prices from January 4 to June 17, 2022.

Also in this case, the State Securities Commission issued a decision to punish 19 other individuals for lending their accounts to others to trade securities, leading to stock market manipulation.

Sanctions too light?

Commenting on why many cases of stock market manipulation have been exposed and handled recently, Mr. Nguyen The Minh, Director of Analysis - Yuanta Vietnam Securities Company, said that the problem is that the sanctions are not strong enough to create a more deterrent effect.

According to Yuanta Vietnam experts, to minimize manipulation in the stock market, not only do we need strong solutions for listed companies, but the management agency also needs to educate investors. Just by not buying "junk stocks" or stocks of companies that frequently violate the law, investors will be able to make the market healthier.

"Many individual investors often overreact to corporate violations, whether big or small, leading to psychological manipulation, selling off based on rumors, causing damage to themselves and the listed company. Meanwhile, the biggest violations of listed companies must be violations related to the disclosure of information on financial reports, which can directly affect the stock market and investors," Mr. Minh said.

From another perspective, economist Dr. Dinh The Hien mentioned that lax management or lack of strictness by authorities in recent times has led to stock market manipulation. In the legal corridor for the stock market, the main problem lies in the implementation process.

"For now, there is no need to think about new solutions. As long as the State Securities Commission, stock exchanges, securities companies, auditing companies... play their roles properly, the stock market will certainly be better. If auditing companies tighten the financial reports of listed companies, the data reflects the true situation of the companies; management agencies strictly control the widespread opening of accounts... it will help significantly improve the transparency of the stock market," Mr. Hien commented.

A financial and securities expert cited evidence from abroad that individuals or organizations involved in stock market manipulation are subject to criminal prosecution, confiscation of all illegally obtained assets, and severe penalties as a deterrent. Meanwhile, similar violations in Vietnam are handled too lightly.

"In the coming time, when the Government advocates developing a healthy stock market and aiming to upgrade it, it is necessary to carry out legal propaganda activities for investors; at the same time, strictly handle individuals and organizations that violate the law to increase the confidence of domestic and foreign investors participating in the stock market" - this expert suggested.

Associate Professor Dr. Nguyen Huu Huan, Ho Chi Minh City University of Economics, said that solutions to prevent stock market manipulation are focusing on form, not on substance. For example, the illegal sale of shares is very common but there are no measures to completely prevent it. The simple solution is to force business leaders and related people to open a special account, and to sell, they must have the approval of the State Securities Commission or the Stock Exchange.

"We should not let them trade illegally and then handle administrative procedures. By then it will be too late because they have already caused damage to other investors. This has been happening for many years but we have not been able to do anything about it," Associate Professor, Dr. Nguyen Huu Huan worried.

Another issue is related to independent auditing. In the stock market, there are many violations related to financial reports but only a few cases are prosecuted. In these cases, the role of the auditing company is very vague while in theory, they are the first to detect violations or problems of the company to give an opinion or warn investors.

"It is necessary to strictly regulate and enhance the role and responsibility of auditing companies in detecting violations of enterprises to protect investors' rights. Strengthening more deterrent measures against cases of price manipulation and manipulation of the stock market will contribute to creating confidence for investors," Mr. Huan suggested.