SSC targets false appropriation of corporate bonds
SSC targets false appropriation of corporate bonds
There is evidently a high risk in corporate bonds after the State Securities Commission (SSC) cancelled nine individual corporate bond offerings valued at VND 10,030 bn belonging to three subsidiaries of the Tan Hoang Minh Group.
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This was claimed to have been done because of disclosing certain false information and concealing information in matters concerning issuance of corporate bonds.
According to the State Securities Commission, the basis for issuing Decision 181/QD-UBCK was to cancel nine separate bond offerings of the Viet Star Real Estate Investment Company Limited, Winter Palace JSC, and Investment and Service JSC Soleil Hotel belonging to the Tan Hoang Minh Hotel Service Trading Company Limited. This was done as per Point C in Clause 1 of Article 9 of the Securities Law of the State Securities Commission. It called for the immediate suspension and cancellation of activities related to securities and the stock market.
The violations by the three subsidiary companies of the Tan Hoang Minh Group are based on the fact that they are all unlisted companies and do not report to the State Securities Commission on issuances and only register information through the corporate bond portal of the Hanoi Stock Exchange (HNX). This is a serious violation of the Government Decree No. 153/2020/ND-CP dated 31 December 2020, on offering and trading corporate bonds privately in the domestic market and also offering corporate bonds to the international market.
The State Securities Commission is dealing with this issue by coordinating with HNX, relevant authorities, and other related units to check the consulting organizations and issuing agents for the offerings of the three subsidiary companies mentioned above, and at the same time the SSC will also strictly handle any other violations these three subsidiary companies may have made.
A representative of the State Securities Commission said that issuing enterprises, be they public or non-public companies, and intermediary organizations consulting on offering documents, registration, bond depository, or issuance agents, that violate in the private placement of bonds will be handled in accordance with the provisions of the decrees sanctioning administrative violations in the field of securities and the stock market. In such cases Decree 156/2020/ND-CP and Decree No. 128/2021/ND-CP have been amended and supplemented in a number of articles.
For any acts of disclosure of false information or concealing a truth in private bond offerings, all violating organizations and individuals may also be prosecuted for criminal liability for causing damages to investors to the tune of about VND 1 bn or more, and for illegally gaining profits the penalty amount will be more than VND 500 mn. In some issuances, the Tan Hoang Minh Group even performed the role of an underwriter, payment guarantor, or representative of bond holder of member companies. It is possible that the Tan Hoang Minh Group used these bonds later to offer several other investors.
According to the Securities Law 2019, privately issued corporate bonds are only sold to professional investors. Specifically speaking, individual investors must have securities practice certificates. These are individuals holding names of listed securities registered for trading with a value of at least VND 2 bn. On the other hand, institutional investors are commercial banks, foreign bank branches, financial companies, insurance business organizations, securities companies, and securities investment fund management companies.
The fact that Mr. Do Anh Dung, Chairman of the Tan Hoang Minh Group, and six other accomplices were prosecuted and detained, and then accused of fraudulently appropriating assets related to the issuance of corporate bonds of their three subsidiary companies, shows that the case may be related to the illegal offering of corporate bonds to other investors as well, and supplying incorrect information or even misuse of post-issuance capital.
