Legal loopholes exposed after former FLC chairman fraud: police

By Pham Du   October 31, 2023 | 06:41 pm PT
Legal loopholes exposed after former FLC chairman fraud: police
Trinh Van Quyet is seen in 2020 when he was the chairman of property developer FLC. Photo by VnExpress/An Binh
The frauds committed by former FLC chairman Trinh Van Quyet and his accomplices have revealed legal loopholes concerning stock account and investment management, the police have said.

The Investigating Police Agency under the Ministry of Public Security pointed out that recent alleged violations of Quyet in manipulating five tickers to gain VND732 billion (US$29.8 million) showed that there are gaps in the legal framework that need to be dealt with.

One of them is the allowance of opening stock accounts with ease without tight supervision and this enable manipulators to register many different accounts to sell and buy back and forth between each other, creating an illusion that a ticker is in high demand.

Individuals who let others control their account should be prohibited from trading for 6-12 months, the agency proposed.

It was referring to Quyet, his two sisters and their accomplices, who had allegedly opened hundreds of stock accounts to trade back and forth five tickers related to property developer FLC to push up their prices.

One of the tickers, GAB of FLC Mining Investment & Asset Management JSC, saw prices surging nearly 18 times after being manipulated.

The police also expressed concern that investors have been opening groups on social media to bait users into investing in their preferred stock. It urged authorities to tighten supervision from now on.

They added that the fine for stock manipulation is modest at a cap of VND4 billion and prison time of seven years.

There are also loopholes in the supervision of charter capital contribution, the police said, referring to Quyet and accomplices who used fake invoices to increase the charter capital of FLC Faros Construction by several thousand times.

Quyet, who was arrested in March last year, then used the shares of the company, which had little value in reality, to sell to investors and received VND3.6 trillion in return.

The police also proposed that investors are banned from borrowing stock accounts of others.

Tickers that see strong fluctuations should be monitored by stock authorities to prevent manipulation, and regulations on increasing charter capital should be tightened to ensure a company has really received its investment, the police added.

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