Calculation of illegal proceeds obtained from committing the act of manipulating the stock market in Vietnam as of February 5, 2024

Calculation of illegal proceeds obtained from committing the act of manipulating the stock market in Vietnam as of February 5, 2024 (Internet image) 

On December 19, 2023, the Minister of Finance issued Circular 73/2023/TT-BTC amending a number of articles of Circular 117/2020/TT-BTC dated December 31, 2020 prescribing methods for calculation of illegal gains or proceeds from violations against regulations on securities and stock market

Calculation of illegal proceeds obtained from committing the act of manipulating the stock market in Vietnam as of February 5, 2024

Specifically, illegal proceeds obtained from committing the act of manipulating the stock market is calculated according to the following formula:

Illegal proceeds = (Average selling price - Average purchase price) x (Selling volume - intra-group trading volume) - Taxes, fees payable.

(1) Average selling price = (Selling value of stocks – Value of intra-group traded stocks) / (Selling volume of stocks – intra-group trading volume of stocks):

(2) If total selling volume of stocks is less than or equal to total buying volume within the manipulation period, the average purchase price shall be calculated as follows:

Average buying price = (Buying value - intra-group trading value) / (Buying volume – intra-group trading volume):

(3) If total selling volume is greater than total buying volume within the manipulation period, the average purchase price shall be calculated as follows:

Average buying price = (Selling value + arbitrage value - intra-group trading value) / (Buying volume + arbitrage – intra-group trading volume). Where

Arbitrage volume = selling volume – buying volume.

Arbitrage value = Arbitrage volume x price of arbitrage volume.

Price of arbitrage volume is the reference price determined on the day starting the manipulation period:

(4) Illegal proceeds in the event that, in the period of manipulation of the stock market, there is any adjustment in the stock price which is calculated as total illegal proceeds during the period preceding the time of price adjustment (the ex-dividend date), and illegal proceeds in the period after the price adjustment.

Illegal proceeds made in the period before the time of price adjustment and the illegal proceeds in the period after the price adjustment are calculated according to the formula specified in this Clause. For the cases where total volume of stocks sold is greater than total volume of stocks purchased in the period after price adjustment, the price of the arbitrage volume specified in point c of this clause is the average buying price determined for the period preceding the ex-dividend date on which price adjustment is made according to the following formula:

P’=(P+Pa*a-C)/(1+a+b)

Where:

P’: the price of arbitrage volume as prescribed in point c of this clause.

P: the average buying price of stocks during the period preceding the ex-dividend date.

Pa: the price of stocks additionally issued to serve the exercise of preferential purchase rights.

a: the percentage of stocks additionally issued to serve the exercise of preferential purchase rights.

b: the ratio of stock division to increase the capital stock from the owner’s equity.

C: cash dividend.

More details can be found in Circular 73/2023/TT-BTC taking effect on February 5, 2024.

Any administrative violations which have been committed before February 5, 2024 but have been detected or under consideration to issue penalty imposition decisions or decisions to impose remedial measures after Circular 73/2023/TT-BTC takes effect shall be handled in accordance with Circular 73/2023/TT-BTC if it provides less serious legal liabilities.

Ho Quoc Tuan

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