Trading firm chairman earned $6.4 mln from stock market manipulation: investigators

By Pham Du   September 19, 2022 | 06:47 am PT
Trading firm chairman earned $6.4 mln from stock market manipulation: investigators
Do Thanh Nhan, former chairman of Louis Holdings. Photo courtesy of Louis Holdings
Do Thanh Nhan, former chairman of Louis Holdings, reaped illicit gains of more than VND153 billion ($6.46 million) from stock market manipulation, investigators allege.

The investigators from the Ministry of Public Security has proposed that Nhan, arrested in April for suspected stock market manipulation. be prosecuted for the crime.

The agency has proposed similar action against Do Duc Nam, general director of brokerage firm Tri Viet Securities and two senior management personnel of the two companies - Trinh Thi Thuy Linh, COO of Louis Holdings; and Le Thi Thuy Lien, financial services executive of Tri Viet Securities.

If convicted, the accused face fines of up to VND4 billion and prison sentences of 2-7 years.

Nhan and others are accused of using multiple accounts to buy and sell shares, manipulating the prices of TGG of Louis Capital, BII of Louis Land and other stocks between 2020-2021.

Nhan and his relatives and friends purchased 9 million BII shares of Bao Thu Industrial Company towards the end of 2020. The stock is performing poorly at present and faces delisting from the Hanoi Stock Exchange.

He proceeded to buy, sell and acquire "junk" stocks with code TGG of Truong Giang Joint Stock Company at the price of VND1,800 per share on the advice of Nam.

Once he obtained two stock codes, BII and TGG, Nhan worked out how to manipulate the market with Nam, investigators say.

The two agreed to open securities accounts in Nhan's friends' and relatives' names in order to buy and sell stocks. The goal was to boost liquidity and drive up the prices of BII and TGG shares in order to profit illegally.

Nhan filed to open two accounts at Beta Securities Joint Stock Company and Tri Viet Securities Company after deciding how he would implement his scheme.

Simultaneously, Nhan's relatives and acquaintances opened 18 accounts at Tri Viet and other security companies. These accounts were opened and transferred to Nhan and Nam to use.

Nhan's borrowings from Tri Viet was the primary source of funds for trading and order matching.

To manipulate the market, Nam asked Huong and Lien to issue orders, match buy and sell internally, cross-sell, match orders to construct ATC closing prices with both TGG and BII shares, investigators found.

Nam kept Nhan informed about the list and the amount of money in each account on a daily basis.

BII experienced successive sessions of ceiling gains with high matching volume and liquidity, peaking at VND33,800 per share on September 18, 2021, over 10 times the price when Nhan's group purchased it in January 2021.

Likewise, TGG grew steadily with ceiling rises, peaking at VND74,800 per share on September 22, 2021, 37 times the price that Nhan purchased it at.

Nhan authorized his staff to transfer funds from the sale of shares to securities accounts in the group at various banks. Nhan's subordinates gave the documents to the person who opened the account at the end of the month for him to sign and validate the formality of the application.

Investors say Nhan has admitted to manipulating the stock market with BII and TGG shares, earning more than VND153 billion.

Other tickers related to Louis Holdings, including AGM, APG, DDV and SMT also constantly hit ceiling prices and scaled new peaks.

However Nhan has claimed that he purchased these shares in order to own and acquire the company, not to influence its prices.

Last September, Louis Capital, a subsidiary of Louis Holdings, said in a statement to the State Securities Commission that it has "never committed any action to manipulate the stock market."

In March this year, Louis Holdings was fined VND160 million and banned from trading in the securities market for two months for buying 4.6 million shares of TGG, exceeding the 3.6 million it had registered with authorities.

Louis Capital was fined VND232.5 million in January for violating regulations on information disclosure.

Tri Viet Securities was also fined VND310 million and its pre-sale services terminated in January for providing advance payment without the approval of the authorities, and employing uncertified brokers.

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