Identification of Securities Officials Facing Criminal Charges
The Investigation agency (C01) of the Ministry of Public Security has recently issued its supplementary investigation conclusion and proposes to prosecute four defendants who hold leadership positions at the Ho Chi Minh City Stock Exchange (HOSE) on the charge of “Abusing powers while performing official duties”, namely: Tran Dac Sinh (Former Chairman of HOSE’s Board of Directors); Le Hai Tra (Former Board Member, CEO, and Independent Member of the Listing Advisory Council); Tram Tuan Vu (Former Deputy CEO, Deputy Chairman of the Listing Advisory Council); and Le Thi Tuyet Hang (Director of the Listing Management and Appraisal Department, Member of the Listing Advisory Council).
In addition, the investigative agency also proposes to prosecute Mr. Le Cong Dien (Deputy Head of the Supervision Department of Public Companies under the State Securities Commission); Mr. Duong Van Thanh (General Director of the Vietnam Securities Depository Center); and Mr. Pham Minh Trung (Director of the Securities Registration Department of the Vietnam Securities Depository Center) on the charge of “Issuing false information or concealing information in securities activities”.
The violations of the above group of officials are determined to be related to the acts of “Manipulating the stock market” and “Misappropriating assets” by Mr. Trinh Van Quyet (Former Chairman of the FLC Group) and his accomplices.
Defendant Tran Dac Sinh.
Specifically, in the act of “Manipulating the stock market”, from mid-2017 to early 2022, Trinh Van Quyet instructed his sister, Trinh Thi Minh Hue, and his accomplices to open securities and bank accounts to manipulate the stock market for 5 stocks (AMD, HAI, GAB, FLC, ART), gaining illicit profits of 72.3 billion VND.
Regarding the act of “Misappropriating assets”, the investigative agency accuses Trinh Van Quyet of instructing individuals who hold leadership positions, employees of Faros Company, and subsidiaries of FLC Group, as well as relatives and kinship members standing as shareholders to contribute capital, fabricate and forge capital contribution documents, inflating the contributed capital by more than 3.102 trillion VND to increase the charter capital of Faros Company from 1.5 billion VND to 4,300 billion VND.
Afterwards, the defendants created the records, requested the relevant state securities management agencies to approve the registration of the public company, securities depository registration, and listing of 430 million shares formed from the inflated contributed capital of Faros Company at HOSE. Subsequently, they sold 391 million shares for 4,818 billion VND, of which the investigative agency identified that the group led by Mr. Quyet misappropriated more than 3,620 billion VND from investors in the stock market.
Defendant Le Hai Tra.
HOSE’s Leadership Helps Due to Pre-existing Relationships
In the supplementary investigation, C01 determined that after receiving Faros’ stock listing proposal dossier, defendant Tran Dac Sinh, in his role as Chairman of HOSE’s Board of Directors, knew that the financial audit reports for 2014 and 2015 of this company were “inappropriate; insufficient basis to determine the contributed capital”. However, due to personal relationships and multiple supports from Mr. Quyet and Doan Van Phuong (former CEO of FLC Group who is currently on the run), Mr. Sinh supported Faros to be listed.
In addition, Mr. Sinh directly instructed his subordinates, Le Hai Tra, Tram Tuan Vu, and Le Thi Thanh Hang, to create the earliest conditions for Faros.
According to HOSE’s operational regulations, the function of evaluating and approving the listing of stocks does not fall under the authority of the Board of Directors. However, in August 2016, when Faros had not completed the dossier, Mr. Sinh instructed HOSE’s Board Office to issue a notification requesting the Listing Advisory Council to report on the evaluation results.
Defendant Trinh Van Quyet.
The HOSE’s Listing Steering Committee, including Mr. Sinh, approved the listing and issued a resolution stating: “Faros’ dossier meets all listing requirements”. Since then, Faros’ stock has been approved for listing at a price of 10,000 VND per share.
Regarding Le Hai Tra, when examining Faros’ listing registration dossier, he was aware that the financial audit report was “violating” as there was no basis to determine the contributed capital and had discussed twice with the members of the Listing Advisory Council with an agreement that the conditions were not met, requiring the company to provide explanations. However, when being reported the explanations by Faros, Mr. Tra and the members of the Listing Advisory Council did not study them but immediately agreed to list the stock.
During the investigation, Mr. Tra admitted to having a “relationship” with Mr. Quyet and the group under the leadership of the Chairman of FLC. Approving the listing helped Faros attract capital from investors in the market, and HOSE earned revenue from listing fees and stock trading fees, thereby enhancing its own reputation.
In his role as Head of the Supervision Department of Public Companies, when appraising Faros’ registration dossier, Mr. Le Cong Dien discovered insufficient grounds for determining the contributed capital. However, without verifying, Mr. Dien signed an approval letter for the registration dossier and published it on the media. Faros was successfully listed with a charter capital of 4,300 billion VND.
In his testimony, Mr. Dien mentioned that Faros is a large company, and Mr. Quyet has many relationships with leaders at various levels and has a law consultancy company, so he was afraid of being affected in his work.
During the appraisal, Mr. Dien requested additional evidence, but he was twice accused by Faros of exceeding his authority, creating difficulties for the company. Due to his fear of being influenced, Mr. Dien continued to act wrongly.
