The FLC Group’s Former Chairman, Trinh Van Quyet, Faces Legal Consequences for Inflating FLC Faros’ Capital
The People’s Court of Hanoi has announced plans to try Trinh Van Quyet, the former chairman of the FLC Group, along with 49 other individuals, for their involvement in inflating the charter capital of FLC Faros Construction JSC (ROS) from 1.5 billion VND to 4,300 billion VND. The trial is expected to commence on July 22 and will likely extend over several days.
This incident of capital inflation orchestrated by Trinh Van Quyet regarding FLC Faros Construction JSC (ROS) and the subsequent inflation of ROS shares is considered a dark stain on the stock market.
Under the manipulation of Trinh Van Quyet, the ROS shares of FLC Faros Construction JSC experienced a meteoric rise from meager beginnings to astonishing heights.
ROS, issued by FLC Faros Construction JSC, is the strangest stock on the Vietnamese stock market. This anomaly helped propel Trinh Van Quyet to briefly become the richest person on the stock market at the end of 2016 and the beginning of 2017, based on the number and value of the ROS shares he held at the time. However, it also left many investors with losses as they passed around this “hot potato.”
Since its listing on the Ho Chi Minh City Stock Exchange (HoSE) on September 1, 2016, ROS has captured investors’ attention. With a reference price of 10,500 VND per share, equivalent to a market capitalization of over 4,500 billion VND at the time, ROS witnessed rapid and continuous growth.
Trinh Van Quyet, Former Chairman of the FLC Group. Photo: HH |
Starting in October 2016, investors witnessed a surge in ROS transactions, with 50-70 million units traded per session. The ROS share price skyrocketed, increasing tenfold within a few months of its debut and reaching 100,000 VND per share.
In mid-November 2016, Trinh Van Quyet unexpectedly surpassed Pham Nhat Vuong, Chairman of the Vingroup, to become the richest person on the stock exchange, leaving everyone stunned and suspicious.
At that time, with a share price of 115,000 VND, Quyet’s assets amounted to approximately 33 trillion VND (1.47 billion USD). This was primarily due to his ownership of nearly 290 million ROS shares. Meanwhile, Vuong’s assets totaled 32,300 billion VND (around 1.44 billion USD).
Le Thi Ngoc Diep, Quyet’s wife, also entered the top 10 richest people on the stock exchange.
From July 24, 2017, ROS was included in the VN30 basket (30 leading stocks on the stock market), and it continued to climb relentlessly.
The most frenzied period for ROS shares occurred between late September and early November 2017. Investors were bewildered as the shares of an obscure construction company soared tenfold and then more than doubled to nearly 215,000 VND per share.
Within six months of its stock market debut, ROS had surged over 2,000%, including a record-breaking streak of 35 consecutive sessions of gains. During this time, Quyet’s wealth briefly surpassed 50 trillion VND. However, he lost the top spot as Pham Nhat Vuong increased his holdings of Vingroup (VIC) shares.
Despite his fluctuating wealth, Quyet was never recognized as a USD billionaire by prestigious publications like Forbes and Bloomberg.
ROS Plummets to 2,000 VND per Share, Seven FLC-affiliated Stocks Delisted, and Trinh Van Quyet’s Downfall
After reaching a staggering market capitalization in 2016-2017, surpassing even major banks like BIDV and Vietinbank, Faros began its downward spiral.
Following its peak in November 2017, ROS started to retreat to the 100,000 VND per share level (adjusted price) by early March 2018, then slipped further to 50,000 VND per share in mid-2018. By early 2020, ROS had fallen below 10,000 VND per share and dropped to 2,000 VND per share in March 2020.
ROS shares then stagnated, mostly trading between 1,000 and 5,000 VND per share, until their delisting in September 2022.
The scheme of capital inflation and share price manipulation came to light following Quyet’s clandestine sale of nearly 75 million FLC shares at the beginning of 2022, an act deemed as “desperate for cash.”
This incident unraveled a web of past misdeeds by Quyet, leading to the sinking of the FLC ecosystem. As a result, all seven FLC-affiliated stocks were delisted to protect investors: FLC, ROS, HAI (Nong Dược HAI), AMD (FLC Stone), GAB (FLC Mining and Asset Management), BOS Securities (ART), and CFS Import Export (KLF).
The FLC Group itself still has over 64,100 shareholders after the delisting of 710 million shares on February 20, 2023. The number of shareholders in the other six companies within the FLC ecosystem is also substantial.
Many investors became victims, unable to escape in time from the collapsing FLC-affiliated stocks.
Regarding ROS, the shares were officially removed from the HoSE in September 2022 but were not approved for trading on the Upcom. As a result, thousands of billions of dong in capital contributions from shareholders became unrecoverable.
In the decision to bring the case to trial, the Hanoi People’s Court identified 63,092 investors holding ROS shares of Faros as stakeholders with legitimate interests. The number of victims in this case is determined to be 30,403 investors who purchased ROS shares during the initial sale.
As the FLC ecosystem collapsed, Trinh Van Quyet’s wealth also took a significant hit. Regarding the charge of “stock market manipulation,” the indictment states that Quyet and his accomplices manipulated the prices of five stocks: AMD, ART, HAI, GAB, and FLC, illegally profiting by over 684 billion VND.
Mạnh HÃ
FLC Scandal: 22 more defendants charged in Trinh Van Quyet case
22 suspects have assisted the former Chairman of the FLC Group, Trinh Van Quyet, in inflating the charter capital of FLC Faros Construction Joint Stock Company from 1.5 billion VND to 4,300 billion VND, equivalent to 430 million shares, listed on the HOSE stock exchange. They are accused of embezzling investors’ money.
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The FLC CEO’s Escape: How did he assist Trinh Van Quyet in fraud?
As the CEO and Chairman of Faros Construction Corporation, Doan Van Phuong, the defendant, instructed the members of the Board of Directors and the Executive Committee to issue a resolution to increase the charter capital and set up a fraudulent capital contribution dossier. The purpose was to assist Trinh Van Quyet in selling shares to misappropriate over 3,620 billion VND from investors in the stock market.
