Millionaires arrested in first probe on stock manipulation

Vietnamese police have arrested the CEO and deputy CEO of Vien Dong Pharmaceutical Joint Stock Company in their first crackdown on securities fraud since the opening of the bourse in Vietnam a decade back.

Following her boss’ arrest November 26, Cao Hong Van, deputy general director and chief accountant of the Ho Chi Minh City-based firm was also taken in Friday for allegedly paying bribes, according to a statement from the State Securities Commission of Vietnam.

It is not clear who took the bribes and how much.

Earlier, Le Van Dung, chairman and CEO of the HCMC-listed Vien Dong firm, was detained for creating a false demand for stocks from the Hanoi-listed Ha Tay Pharmaceutical Joint Stock Company where Dung has a major stake in an effort to artificially raise their prices.

Dung had set up 11 different accounts under family’s and friends’ names to ‘purchase’ the Ha Tay stocks, enticing unwitting investors to jump on the bogus bandwagon, pushing up share prices to VND100,000 (US$50) per share from VND30,000 ($15).

Lured into buying the stock at inflated prices, the investors lost big money when Dung’s group began to dump their shares in late July in what is usually known as a “pump and dump scheme.”

The stock watchdog has frozen Dung’s trading accounts and those belonging to Vien Dong’s two big corporate shareholders: Hoan Thien Technology and Trade Joint Stock Company and Medi Joint Stock Company.

Thirteen other related individuals, who have yet to be identified, have also had their accounts blocked pending further investigation.

Dung currently holds around 4 million shares of Vien Dong, worth VND240 billion ($12 million), and was listed by a local online newswire as the 60th-richest tycoon on the domestic stock market last year.

He was removed from all management posts at Vien Dong on November 25.

His younger brother has also been arrested.

The case is now under criminal investigation.

Vien Dong had previously obtained approval to sell more shares to existing shareholders and employees in August but the Commission then suspended the sale on November 19 due to incorrect financial reports and omission of important information about the company’s big contracts.

Source: Tuổi Trẻ Online

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