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Are stockbrokers misusing investor funds?
Concerns that some staff at securities companies are using investor funds for their own agenda have emerged recently.
A Ha Noi investor, who requested anonymity, said that in an opening session one month ago he placed an ATO (at the open) order at a securities company to sell shares.
"Someone from the company called to tell me that my order was suspended due to a software error and wouldn’t go through. He suggested I cancel the order but I refused, insisting he comply with trading regulations."
"The next day there was no problem with the order, which made me suspect that no error existed. If I had cancelled it, I believe there would have been another investors’ order in place of mine."
Nguyen Dinh Phong, director of the Investment Service Department of the VNDirect Securities Company said: "It is very possible that investor funds are being misappropriated."
Not all investors trade daily. Some buy shares and keep them untouched for a long time. It is these accounts that are at the most risk of being misused.
"Self-serving brokers "borrow" money from investors’ accounts to either pay another investor or use themselves," he said. "They return it before investors check their accounts."
In fact, when staff in securities companies’ accounting and IT departments co-operate closely it is hard for anyone to discover.
Securities companies do have monitoring systems in place to combat trading errors, but the systems are often inexact, Phong said.
The million-dollar question is whether securities companies want to build trust among their investors by operating ethically as trading information and account balances are supplied by the companies themselves.
For the benefit of investors that don’t check their accounts regularly trading results can be sent via SMS or e-mail, but few companies bother to do so.
Hoang Huy Duoc, vice chairman of the Ha Noi Bar Association, which offers securities advice said that as the Vietnamese stock market is still fledgling, investors have little sense of safeguarding their assets.
He suggested they keep all trading documentation such as invoices, as they can be used as proof in case of a dispute.
Nguyen Son, head of the Stock Market Development Department under the State Securities Commission (SSC) said: "We are aware that this activity may be going on, but have yet to catch anyone."
According to a new regulation which hopes to avoid misappropriation, investor capital will soon be deposited in banks, providing a buffer between securities companies and the funds of its investors.
SSC’s supervision department pledges to monitor the situation closely, conduct random inspections of securities companies and punish offenders heavily.
VNA
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