Stocks sale annulment of FLC Chairman necessary to maintain market order: SSC
FLC Chairman Trinh Van Quyet is subject to the heaviest penalty for failing to notify stock market authorities before selling his FLC shares.
Invalidating the stock transaction carried out by the Chairman of conglomerate FLC Group Trinh Van Quyet was an unprecedented move, but a necessary step to ensure market transparency and discipline.
FLC Chairman Trinh Van Quyet.
A representative of the State Securities Commission of Vietnam (SSC), the country’s stock market watchdog, told local media on January 12 in response to its decision to cancel Quyet’s sale of 74.8 million shares of FLC two days earlier, as he failed to publicly declare the sale to the authorities.
“Stock market authorities are taking the required steps to ensure the healthy development of Vietnam’s market,” he noted.
In line with such a move, the SSC informed it has frozen all securities accounts owned by the FLC Chairman to “prevent possible violations”, while other parties, including the Ho Chi Minh City Stock Exchange (HOSE), the Vietnam Securities Depository (VSD), and securities companies, are tasked with reverting all transaction from Quyet’s accounts.
“The move is time-consuming but necessary to maintain market order,” he suggested.
The Government’s decree No.128 stipulating administrative penalties in the stock market requires major shareholders to notify the authorities in advance of any intended transactions. Those violating the law, therefore, are subject to a penalty ranging from VND5 million ($220) to 5% of the actual transaction value that is over VND10 billion ($440,000).
As the total transaction value in subject was estimated at a par value of VND748 billion ($33 million), the fine would be around VND37.4 billion ($1.64 million). The decree, however, provided the maximum penalty for an individual is VND1.5 billion ($66,000).
At the close on January 10, FLC’s stocks ended at the floor price of VND21,150 ($0.93) with nearly 135 million shares changed hands, the biggest volume since the company’s debut on the HoSE in 2013.
During the trading session, the company’s stock went up to VND24,100 ($1.04) apiece, meaning Quyet’s sale of 74.8 million shares would have raised VND1.8 trillion ($79.28 million) at that price.
FLC’s share value has more than doubled since September, equivalent to an increase of 363% since January of last year.
With this latest decision, investors who have purchased Quyet’s FLC shares on January 10 would not receive any shares or have their money deducted, and Quyet would receive back all of his shares.
Quyet, however, would be subject to the heaviest penalty possible, according to local media.