Responding to a journalist’s question about the investigation results of the Tan Hoang Minh and FLC case, and the lessons to be learned to restore the stock market’s integrity, Lieutenant General To An Xo, the spokesperson for the Ministry of Public Security, shared detailed information at the regular government press conference in February 2024, which took place on March 2, 2024, in Hanoi.
Lieutenant General To An Xo, the spokesperson for the Ministry of Public Security, provided information about ongoing hot cases – Photo: VGP/Nhat Bac
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In particular, Lieutenant General To An Xo stated that through the FLC and Tan Hoang Minh cases, the Ministry of Public Security raised awareness about market manipulation in the stock and bond markets. The media has extensively covered these two cases. The investigation agencies have concluded their investigation, and the Prosecutor’s Office has filed charges. The trials will commence soon.
Regarding how to ensure a healthy market, Lieutenant General To An Xo revealed that during the investigation, it was discovered that FLC’s market manipulation involved two actions. The first action involved fraud and misappropriation of assets. Specifically, Trinh Van Quyet instructed the fabrication and signing of fictitious contribution files at FLC Faros Construction Joint Stock Company (ROS), which increased the capital from VND 1,500 billion to VND 4,300 billion. Subsequently, they legalized the files to have them accepted by the securities regulatory agency, thereby committing fraud and misappropriating VND 3,620 billion.
The second action involved market manipulation by using personal documents of 45 family members to establish 20 companies that were not engaged in business activities. They used these legal entities to open 500 stock trading accounts for securities manipulation purposes.
The market manipulation methods employed included continuous buying and selling of the same securities, match trading within the group, placing multiple orders at the opening and closing time, and placing and canceling multiple orders to create fake supply and demand, tricking investors into following suit. From May 26, 2017, to January 10, 2022, this group used 190 accounts to manipulate the market and illegally gained VND 723 billion.
From these findings, it can be concluded that the perpetrators took advantage of weaknesses and lapses in state management and related legal provisions. These weaknesses include inadequate inspection, supervision, and control by functional agencies over capital contributions to businesses, leading to falsification and legalization of capital. There is a lack of control over the opening of stock trading accounts, making it easy for individuals to open multiple accounts under other people’s names. Penalties for violations are lenient and insufficient to deter individuals from committing such acts. The state’s regulation and management of audit service quality and individual responsibilities are not specific enough. Social media lacks adequate control, allowing some individuals to manipulate and control investors by creating closed groups. There are no regulations or legal guidelines to determine the damages suffered by investors during the period of market manipulation.
Based on these lessons learned, the relevant authorities have taken measures to “close the loopholes.” It is hoped that the Vietnamese stock market will develop healthily and according to market mechanisms in the future. The police also sent a message to stock investors, advising them not to take advantage of these vulnerabilities for market manipulation. If individuals or organizations continue to engage in such actions, they will be strictly dealt with according to the law, ensuring the market’s healthy operation.
Regarding the case related to Phuc Son Corporation, Lieutenant General To An Xo stated that the media had mentioned the company for several years, but it was not until February that the case was clarified and prosecuted.
According to preliminary information provided by the investigative agency, Phuc Son Corporation has been operating since 2004 and initially focused on construction projects in the district. From 2015, it expanded its operations from the North to the South and has been involved in 21 projects with a total investment of over VND 40,000 billion.
During the initial investigation, it was found that Phuc Son Corporation concealed their financial records, evaded tax obligations, and caused more than VND 640 billion in damages to the state budget. They currently owe tens of thousands of billion VND in taxes. Many real estate projects were sold without meeting the necessary conditions, and the company collected money without transferring ownership to investors, causing damages of tens of thousands of billion VND to the public.
From this, it can be seen that the responsibility of the management authorities lies in the lack of control over financial reporting activities. Despite the company’s failure to fulfill its financial and tax obligations, it continued to operate without a clear understanding of its actual capacity when awarded projects.
“Initially, it was a small district-level enterprise, but it expanded to various places and won multiple billion-VND projects while its capacity remained average. Many other corporations did not receive such large-scale projects. The Deputy General Director of Phuc Son Corporation had just finished the 9th-grade program. Overcoming poverty is commendable, but in the process of wealth accumulation, one should not infringe upon the legitimate rights and interests of the State and the people. The investigative authorities are focusing on clarifying and expanding the investigation to prosecute the right people for the right crimes, recovering assets for the State and the people,” shared Lieutenant General To An Xo, the spokesperson for the Ministry of Public Security.
