Illegal earnings from the stock market may be subject to criminal liability

After 3 months of implementation, can you share some differences in inspecting and supervising on the stock market since the implementation of Decree 145/2016/ND-CP amending and supplementing some articles of Decree 108/2013/NĐ-CP dated 23/9/2013 of the Government regulating penalties for administrative violations in securities and the stock market?

The SSC always considers surveillance inspection to be central. In 2016, the inspection and supervision of the market was organized regularly with the periodical and extraordinary inspection of the Commission up to 90 delegations. On average, one inspection official is in charge of 2-3 teams in which released 132 sanctioning decisions with sanctions of approximately 13 billion VND.

In particular, the SSC has completed the legal framework for inspection and supervision of the stock market. Previously, Decree No. 108/2013/ND-CP stipulated in detail the sanctions and fine levels with violations on the stock market. However, in recent years, together with regulations detailing new products of the market, we submitted to the Government the amendment and supplementation of Decree 108/2013/ND-CP. Decree 145/2016/ND-CP regulates many new penalties in relation to derivative stock market, covered warrant and specially the issue of promoted equitization with sanctions concerning the equitization of State-owned enterprises that are not registered in the market, they will be subject to heavy fines.

The issue of individual responsibility for the heads, the people involved with violations in the stock market is also a strict punishment form that has been strictly applied by the SSC since Decree 145/2016/ND-CP was put in place. At the same time, the SSC has repeatedly publicized the violations on the SSC's website as well as on the media.

How is the inspection and supervision of public companies promoted by the SSC, ma’am?

Inspection and supervision of public companies is promoted by the SSC by the establishment of the Public Company Supervision Department. This case came into existence in order to oversee public companies, to monitor the activities of listed public companies in compliance with the securities laws. The SSC is highly appreciated and expects to oversee its operations from the disclosure of information to the oversight of the auditors at audit firms.

Since the Department was established, the SSC has periodically audited the auditing firms and suspended 16 auditors and a large audit firm. For cases where financial statements are prepared in the reporting periods, we have adequate disclosure requirements and fair treatment, requiring these companies to correct the information in the financial statements to the investors.

It is known that, although there are specific sanctions, but not necessarily the work of inspection and supervision of the Commission has "cleared", could you share some more about this issue?

Decree 145/2016/ND-CP has basically covered acts of administrative violation on the stock market. However, there are still some limitations in the monitoring and sanction due to the SSC not yet authorized to handle.

In the Criminal Code (amended) that will be submitted to the National Assembly in the coming time, we also propose to introduce new charges related to the field of securities such as falsified release dossiers, or stock posted dossiers. This is a new type of crime that through the process of inspection and supervision, prognosis may occur on the stock market, we have proposed to the Criminal Code (amended) drafting board to supplement this kind of crime that crime has been supported by relevant agencies such as the Procuracy, the Court, and the Police. This will ensure more aggressive deterrence on the stock market.

In the case of securities manipulation, it was previously reported that the fine level of 400-500 million vnd was not enough to deter this behavior. However, in the Criminal Code, it is necessary to determine the losses for criminal conviction, but in the field of securities, this determination is not easy. For example, when this investor manipulates, but other investors are profitable, so in many cases the SSC cannot calculate the losses. Therefore, we propose another type of crime in the Criminal Code (amended) is to make illicit profits. That is, illicit profits of 500 million vnd or more will be subject to criminal liability. So, while ensuring the deterrence that investors intend to illicitly profit will be quite cautious with this new regulation. I think this is a form of strict punishment.

Inspection and supervision is also “as a last resort”, but the investors always want management agencies to increase sanctions to have a transparent market. In the coming time, how will the SSC focus on this work, ma'am?

In 2017, one of the tasks of the SSC is to improve the efficiency of management and supervision of the stock market and strictly handle violations. This is to improve the awareness of the law enforcement on securities and stock market of those who have obligations to report and disclose information of market members in trading activities and professional ethics of practitioners.

In the coming time, the SSC will continue to promote regular monitoring, closely watching and collecting information in order to detect signs of violation for timely processing, inspection, examination, verification and coordination with other functional agencies to clarify and strictly handle violations, especially violations of manipulation, internal transactions, acts with signs of crimes that infringe upon the lawful rights and interests of the investors who participating in the market. On the basis of the results of the inspection and handling of violations, the management agency shall request the violated organizations or individuals to correct and remedy.

Illegal earnings from the stock market may be subject to criminal liability.

Thank you!