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Pharma executive arrested for alleged securities fraud
Le Van Dung, Chairman and General Director of Duoc Vien Dong Pharmaceutical Company, has been detained by police for alleged securities price manipulation. The company is listed on the HCM City Stock Exchange as DVD.
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| Mr. Le Van Dung |
This is the first arrest in Viet Nam involving securities fraud since the country's stock market opened in 2000.
Dung made transactions with other people to allegedly manipulate the price of another pharmaceutical firm, the Duoc Ha Tay Company, listed on the Ha Noi Stock Exchange as DHT.
The transactions were alleged have been made via trading accounts opened by Dung's younger brother Le Van Manh and several other people.
The transactions created false demand, and lured many investors into buying DHT shares at high prices. They then suffered losses.
According to the State Securities Commission, on June 21 Dung held 18.74 per cent of DHT's VND41 billion (US$2.05 million) in chartered capital.
The Medi Investment Company, a shareholder of DVD, also owned several per cent, as well as DVD itself.
In all, they have a stake of 28.68 per cent. Their purchases, as a group, are supposed to be made public when they exceeded 25 per cent under current regulations. But they were not, according to authorities.
DVD and a group of shareholders continued their DHT buying, increasing their ownership to around 60 per cent, according to Tuoi Tre Newspaper.
They managed to inflate the DHT price, from VND30,000 to VND100,000. DVD sold out its stake in July.
Last Friday, DHT shares closed at VND49,300.
In early September, DHT officially blamed the price fall on manipulation by DVD and those people associated with it.
The SSC suspended DVD share issuance to the public for 60 days beginning November 19, basing its decision on the incorrect, insufficient information in the prospectus.
Dung holds around 4 million out of the total of 11.9 million DVD shares.
Last Thursday, DVD executive board relieved Dung of his position as the company chairman and general director.
HOSE announced last Friday that DVD shares would be put on alert as a way to protect investors, saying Dung's arrest might strongly affect the company's operation.
vietnamnet, VietNamNews
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