Vietnam: Formula for calculating illegal proceeds obtained from manipulating the stock market

According to Clause 3 Article 3 of the Circular No. 117/2020/TT-BTC of the Ministry of Finance of Vietnam, 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.

In which:

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

- 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):

- 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:

- Illegal proceeds from performing the act of manipulating the stock market 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-rights 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 reference price determined on the ex-rights date.

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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