Strong sanctions for violations in securities sector

Decree 156/2020/ND-CP on sanctioning of administrative violations in the securities sector takes effect from the beginning of 2021.

Stock market manipulation was fined up to 3 billion VND

According to Decree 156, the main sanctions for administrative violations in securities and securities market include a warning; monetary fine; to suspend securities trading for a period of 1-12 months and deprivation of the right to use representative office operation registration certificates or securities practice certificates for 1-24 months.

For fines, for violations of using inside information to buy and sell securities and manipulate the stock market, the decree stipulates the maximum fine level of 10 times the illegal revenue for with the organisation and five times the illegal revenue for individuals. In case there is no illegal revenue or the fine level calculated according to illegal revenue is lower than the maximum fine level specified above, the maximum fine level for sanctioning the administrative violation of securities sector is 3 billion VND for organisations and 1.5 billion VND for individuals. In addition, the act of manipulating the stock market may cause additional penalties such as suspending securities trading and services for a period of 1-3 months or depriving of the right to use the securities practising certificate for a period of 18-24 months.

Compared to the previous regulations in Decree 145/2016/ND-CP, this fine has increased (Clause 1, Article 1 of Decree 145 stipulates the maximum fine level for violators is 2 billion VND and for fish violation is 1 billion VND).

Decree 156 also stipulates a fine of 400 - 500 million VND for making or confirming the application file for offering or private placement of securities containing false or concealing information. For forging papers, certification on forged papers proving that the eligibility to offer, issue in the dossier of registration for private offering or the issuance of securities will be fined from 1 to 1.5 billion VND.

Regarding violations of the regulations on securities listing and securities trading registration, the decree also stipulates a fine of between VND 2.5 - 3 billion for forging papers, certification on forged papers proving eligibility to list securities in the securities listing registration dossier or forging papers or certifying on forged papers in a securities transaction registration dossier. Those who commit acts of organising securities market transactions contrary to the provisions of Clause 2, Article 42 of the Law on Securities will also be fined from 2.5 to 3 billion VND.

Serious fine for counterfeiting papers

For violations of regulations on the private offering and issuance of securities, Decree 156 provides a fine of VND 200-300 million for private offering or issuing securities when conditions are not met per the law and regulations requirements. For making or certifying the registration documents for offering, issuing, or private securities with false information, false information or hiding the truth, a fine of between VND 400-500 million will be imposed. Notably, Decree 156 stipulates a fine of 1 - 1.5 billion VND for forging papers, confirming on the forged papers proving the eligibility for offering and issued in the registration dossier for sale and securities issuance separately.

For violations of regulations on information disclosure, Decree No. 156 stipulates a fine of between VND 70 million and 100 million for one of the violations like failure to disclose information that must be disclosed according to regulations of law or at the request of the State Securities Commission, Vietnam Stock Exchange; do not confirm or correct information or confirm, correct information not on time as prescribed by law when there is information affecting securities prices or upon receipt of a request to confirm or correct the information of State Securities Commission, Vietnam Stock Exchange and its subsidiaries as regulated. At the same time, a fine of from VND 100 million to VND 200 million will be imposed for creating false information or disclosing false information or hiding information via securities activities.

According to a representative of the State Securities Commission, Decree 156 has many new features compared to Decree No. 108/2013/ND-CP regulating the sanctioning of administrative violations in the field of securities and securities markets. Accordingly, sanctions were raised. The penalty framework is also raised from 40-50% compared to the old level. The maximum penalty level for market manipulation was raised to 3 billion VND and illegal recovery is up 10 times. Besides, in Decree 156, there is another new point is the expansion of potentially sanctioned subjects, including auditing firms.