Home Stock Market The Six Types of Behavior That Are Considered Stock Market Manipulation

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The Six Types of Behavior That Are Considered Stock Market Manipulation

2 December, 2024

On the afternoon of November 29, with the majority of delegates present in favor, the National Assembly passed the Law amending and supplementing a number of articles of 9 laws (Securities; Accounting; Independent Audit; State Budget; Management and Use of Public Assets; Tax Administration; Personal Income Tax; National Reserves; Handling of Administrative Violations). The law will take effect from January 1, 2025.

Regarding the Securities Law, six groups of manipulative behaviors in the securities market are strictly prohibited, including:

Using one or more of their own or others’ trading accounts or colluding to continuously buy and sell securities to create fake supply and demand.

National Assembly deputies vote to pass the law. Photo: National Assembly

Placing buy and sell orders for the same type of securities on the same trading day or colluding to trade securities without actually transferring ownership, or transferring ownership only within the group to manipulate security prices and create fake supply and demand.

Continuously buying or selling securities in dominant quantities at the market opening or closing to manipulate security prices.

Trading securities by colluding and enticing others to continuously place buy and sell orders, significantly influencing the supply and demand and prices of securities, thereby manipulating security prices.

Expressing opinions directly or indirectly through the mass media about a particular security or its issuing organization to influence its price after having traded and held a position in that security.

Using other methods or committing other acts, or a combination of spreading false rumors and providing misleading information to the public to create fake supply and demand, thereby manipulating security prices.

Head of the Finance and Budget Committee Le Quang Manh presents explanations. Photo: National Assembly

As for the Law on Independent Audit, it stipulates that organizations and individuals who violate the provisions of this law shall, depending on the nature and severity of the violation, be subject to administrative sanctions, criminal prosecution, and state management measures.

If causing damage, the violating organization or individual must compensate in accordance with the law. The maximum administrative fine in the field of independent auditing is VND 2 billion for organizations and VND 1 billion for individuals. The statute of limitations for administrative violations in the field of independent auditing is five years.

The Government will detail the handling of administrative violations in the field of independent auditing.

During the discussion on this issue, some deputies suggested clarifying the basis for the level of administrative sanctions to ensure deterrence. Some suggested that the maximum fine should only be doubled compared to the present and that the maximum statute of limitations should be two years due to the shortage of auditors compared to market demand.

In his explanation before the law was passed, Mr. Le Quang Manh, Chairman of the National Assembly’s Finance and Budget Committee, said that the above fine levels are the maximum and only apply to some serious violations of auditing standards that do not warrant criminal prosecution.

Therefore, it is possible to consider stipulating as in the draft law submitted to the National Assembly for approval to ensure deterrence against auditing firms and auditors, especially as there have been some cases of serious violations of professional and ethical standards by auditing firms and auditors recently.

The National Assembly Standing Committee requested that the Government review and assess the specific impact and set reasonable penalty levels for each act as suggested by the deputies during the process of finalizing the draft decree.

Tran Thuong