08 principles to determine illegal proceeds due to violations of the law on securities in Vietnam

According to Clause 2 Article 3 of the Circular No. 117/2020/TT-BTC of the Ministry of Finance of Vietnam, calculation principles of illegal proceeds are as follows:

- Illegal proceeds are determined from the time of commencement of commission of offenses to the time of cessation of offenses;

- The period for stock market manipulation is the time length during which the violator commits the act of manipulating the stock market which is recorded in the notice of administrative offense. The period for use of internal information for purchase and sale of securities is the period during which the violator performs the act of using internal information for buying and selling securities which is recorded in the notice of administrative offense. The number of trading accounts involved in the act of manipulation of stock markets or use of internal information for purchase and sale of stocks is defined in the notice of administrative offense;

- In case an entity or individual commits multiple offenses, illegal proceeds specific to offenses shall be determined.

- In case an entity or individual commits offenses in multiple times, illegal proceeds specific to times of commission of these offenses shall be determined;

- In case an entity or individual commits offenses involving multiple stock accounts, illegal proceeds specific to stock accounts shall be determined;

- In case where an entity or person uses multiple accounts for manipulating the stock market or uses internal information to buy and sell stocks, illegal proceeds shall be calculated based on total number of trades via accounts used to commit offenses after taking away intra-group transactions between accounts (if any). An intra-group transaction is a transaction between stock accounts that does not result in any real transfer of ownership, or ownership that only circulates between intra-group accounts.

- In case where a group of entities or a group of persons, or a mixed group of entities and persons commits the act of manipulation of the stock market or use of internal information for purchase and sale of stocks, illegal proceeds shall be calculated based on total number of trades via accounts used to commit offenses after excluding intra-group transactions between accounts (if any);

If there is no grounds for determining illegal proceeds of specific violating entities or persons, these illegal proceeds shall be divided equally among these violating entities or persons;

- Based on notices of administrative offenses arising from the act of manipulating the stock market or the act of using internal information for purchase and sale of stocks, the chief inspector of the inspection team shall be responsible for calculating and making a report on the calculation of illegal proceeds, and submitting it to the President of the State Securities Commission to seek his/her decision.

In case where there are illegal proceeds from the act of manipulating the stock market or using inside information to buy and sell securities, the President of the State Securities Commission shall set up a Council for calculation of illegal proceeds. The composition of the Council for calculation of illegal proceeds shall be decided by the President of the State Securities Commission. The President of the State Securities Commission may consult opinions from stock experts of the Ministry of Finance, socio-professional organizations, public security agencies and other relevant agencies, organizations and individuals.

More details at the Circular No. 117/2020/TT-BTC of the Ministry of Finance of Vietnam, effective from February 15, 2021.

Thuy Tram

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