USING INTERNAL INFORMATION FOR TRADING SECURITIES, WHAT ARE THE SANCTIONS?

Using internal information for trading securities to oneself or another person; Revealing or providing internal information or advising another person to buy or sell securities based on internal information are the prohibited acts related to securities and securities market prescribed by laws. This behavior may be subject to administrative sanctions or criminal prosecution depending on the severity of the violation. So, what are the specific sanctions for violations of using internal information for trading securities?

1. What is using internal information for trading securities?

According to current Securities Law, “using internal information for trading securities” is defined as including one, several or all of the following acts:

– Using internal information to buy or sell securities to oneself or another person;

– Revealing or providing internal information or advising another person to buy or sell securities based on internal information.

Those are the prohibited acts related to securities and securities market.

2. Using internal information for trading securities may be subject to administrative sanctions

Pursuant to Decree 156/2020/ND-CP, amended and supplemented by Decree 128/2021/ND-CP, administrative sanctions for using internal information for trading securities at specific acts and levels of violations are as follows:

– Fines:

Fine applied equal to 10 times the illegal revenue, but not lower than the maximum prescribed fine, equivalent to VND 3 billion for organizations; and VND 1.5 billion for individuals. In case there is no illegal revenue or the fine calculated based on the illegal revenue is lower than the above maximum fine, this maximum fine will be applied for punishment.

– Additional penalties:

Subjects may be suspended from securities business and service activities for a period of time from 01 month to 03 months for securities companies, securities investment fund management companies, branches of securities companies or public companies, Foreign fund management companies in Vietnam have committed violations; Revocation of the right to use securities practice certificates for a period of 18 months to 24 months for securities practitioners who commit violations.

– Remedial measures:

Subjects may be required to return illegal proceeds obtained as a result of violations.

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3. Using internal information for trading securities may result in criminal prosecution

Pursuant to the provisions of the Criminal Code 2015, people who use internal information for trading securities may be prosecuted for criminal liability with the following penalties:

a. For violator as individual:

(i). Any person who has information about a public company or public fund which has not been published and could remarkably affect securities price of that public company or public fund but and uses such information to deal in securities or discloses it or provides it for another person for trading securities and earns an illegal profit of from VND 300 million to under VND 01 billion or causes a loss to investors of from VND 500 million to under VND 1.5 billion shall be liable to a fine of from VND 500 million to VND 02 billion or face a penalty of 07 – 36 months’ imprisonment.

(ii). This offence committed in any of the following circumstances carries a fine of from VND 2 billion to VND 05 billion or a penalty of 02 – 07 years’ imprisonment:

– The offence is committed by an organized group;

– The illegal profit reaped is ≥ VND 01 billion;

– The loss incurred by investors is ≥ VND 1.5 billion;

– Dangerous recidivism.

(iii). The offender might also be liable to a fine of from VND 50 million to VND 200 million be prohibited from holding certain positions or doing certain works for 01 – 05 years.

b. For violator as organization:

– Committing a crime in the case specified in item (i) above, shall be fined from VND 01 billion to VND 05 billion;

– Committing a crime in the case specified in section (ii) above, shall be fined from VND 5 billion to VND 10 billion;

– Committing a crime under prescribed circumstances can result in permanent suspension of operations.

In addition, commercial legal entities violating stock market manipulation may also be banned from doing business, and banned from operating in certain fields from 01 year to 03 years.