Circular No. 217/2013/TT-BTC guiding the implementation of administrative penalties in the securities and securities market sector

 CIRCULAR

Guidelines for Implementing Administrative Penalties

in the securities and securities market sector

_________________

 Pursuant to the Securities Law dated June 29, 2006 and the Law Amending and Supplementing Certain Provisions of the Securities Law dated November 24, 2010;

Pursuant to the Law on Handling Administrative Offenses dated June 20, 2012;

Pursuant to Decree No. 81/2013/NĐ-CP dated July 19, 2013 of the Government detailing certain provisions and measures to implement the Law on Handling Administrative Violations;

Pursuant to Decree No. 108/2013/NĐ-CP dated September 23, 2013 of the Government on administrative penalties in the securities and securities market sector;

Pursuant to Decree No. 118/2008/NĐ-CP dated November 27, 2008, of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Part I. 

The Minister of Finance issues this Circular guiding the implementation of administrative penalties in the securities and securities market sector.

PART I

GENERAL PROVISIONS

Article 1. Scope of application

1. Individuals and organizations committing administrative violations in the securities and securities market sector.

2. Individuals and organizations related to the imposition of administrative penalties in the securities and securities market sector.

Article 2. Statute of Limitations for Imposition of Penalties

1. The statute of limitations for imposing administrative penalties for violations in the securities and securities market sector is two years from the date the violation ends or from the date the violation is discovered if it is ongoing. The date of discovery of the administrative violation is the date the record of the violation is made.

2. The determination of the statute of limitations for certain violations is specifically guided as follows:

c) For violations concerning the reporting and disclosure of information not within the prescribed time frame, failure to report or disclose information as required, the date of the violation is considered to be the next day following the deadline for reporting or disclosing information as required;

d) Within the period specified in Clause 1 of this Article, if individuals or organizations deliberately evade or obstruct the imposition of penalties, the statute of limitations for administrative penalties is recalculated from the date the evasion or obstruction ends. The end date of the evasion or obstruction is the date the violator voluntarily reports and complies with the forms of administrative penalties in the securities and securities market sector. The competent authority executing official duties must make a record of this, retain a copy in the violation file, and provide a copy to the individual or organization that violated.

Article 3. Forms of monetary penalties and measures to address consequences

1. The determination of the amount of fines for individuals and organizations that violate laws in the securities and securities market sector shall be specifically guided as follows:

The specific amount of fine for a violation is the average level within the fine range prescribed for such violation. The average level within the fine range is determined by dividing the sum of the minimum fine and the maximum fine equally.

2. The determination of the amount of illegal gains for administrative violations in the securities and securities market sector shall be carried out by the State Securities Commission.

The State Securities Commission shall develop a method to calculate the amount of illegal gains for administrative violations in the securities and securities market sector, suitable to the actual situation and specific cases.

a) Within one working day from the date of receipt of the decision on administrative violation penalty, the violator must publish on one central newspaper for three consecutive issues and on the company's website regarding the refund of the money paid for securities or deposit (if any) plus interest calculated at the demand deposit rate of the bank where the violator has an account for collecting money paid for securities or deposit. The interest on the money paid for securities or deposit that the violator must pay to the investor is calculated from the date the investor pays the money until the date the violator returns the money to the investor. In case the investor has legally transferred the securities purchased in the offering period, the violator is responsible for identifying the investors who received the transfer before the announcement of the refund and the quantity of securities currently held to inform the relevant investors;

b) The violator must report to the State Securities Commission on the results of the refund to investors of the money paid for securities within three working days from the completion of the refund to investors.

Chapter II

VIOLATIONS, FORMS OF PENALTIES AND AMOUNTS OF FINES

Article 4. Violations concerning registration documents for securities offerings; issuance documents for securities; establishment documents for member funds; listing and trading documents for securities; application documents for granting and supplementing licenses for establishment and operation; registration documents for establishing single private securities investment companies self-managing capital; application documents for issuing certificates of registration for representative offices; registration documents for securities custody operations, branches conducting securities custody operations

1. The provisions of Point a Clause 3 Article 4, Clause 2 Article 5, Clause 3 Article 7, and Point a Clause 2 Article 8 Decree No. 108/2013/ND-CP shall apply in cases of violations involving the following information:

a) Information on business activities, assets, financial status of the issuer organization;

b) Information on conditions for offering and issuing, plans for issuance and use of proceeds from the offering and issuance;

c) Legal information and documents related to the use of capital for investment, business, and development of real estate projects;

d) Information on commitments to guarantee issuance;

đ) Information on unfulfilled commitments of organizations whose securities are being offered and issued; information on disputes or lawsuits related to organizations whose securities are being offered and issued that may affect the price of offered and issued securities;

e) Information on the list of parent companies, subsidiary companies of the issuer organization, companies in which the issuer organization holds control rights or controlling shares, and companies holding control rights or controlling shares of the issuer organization.

2. The provisions of Clause 3 Article 14 and Clause 4 Article 15 Decree No. 108/2013/ND-CP shall apply in cases of violations involving the following information:

a) Information on listing conditions, registration conditions for trading;

b) Information on business activities, assets, financial status of listed organizations, organizations registering for trading;

c) Information on commitments to fulfill obligations of listed organizations, organizations registering for trading towards investors;

d) Information on guarantees for payment or statements determining the value of collateral assets and documentation on legal ownership rights and insurance contracts for those assets in the case of listed guaranteed bonds;

đ) Information on reports on investment results of funds and public securities investment companies with confirmation by supervisory banks;

e) Information on the list of parent companies, subsidiary companies of listed organizations, organizations registering for trading, companies in which listed organizations, organizations registering for trading hold control rights or controlling shares, and companies holding control rights or controlling shares of listed organizations, organizations registering for trading.

a) Information on conditions for granting and operating licenses for securities companies, fund management companies, single private securities investment companies entrusted to manage capital, branches of foreign securities companies or fund management companies in Vietnam;

b) Information on business activities, assets, financial status of organizations applying for granting and supplementing licenses.

4. The provisions of Clause 3 Article 23 Decree No. 108/2013/ND-CP shall apply in cases of violations involving information on conditions for granting and operating licenses for single private securities investment companies self-managing capital.

5. The provisions of Point a Clause 4 Article 24 Decree No. 108/2013/ND-CP shall apply in cases of violations involving the following information:

a) Information on conditions for issuing certificates of registration for representative office operations;

b) Information on the person expected to be appointed as the Head of the Representative Office.

6. The provisions of Clause 4 Article 25 Decree No. 108/2013/ND-CP shall apply in cases of violations involving the following information:

a) Information on the minimum capital contribution;

b) Information on the contributing members.

7. The provisions of Clause 3, Article 30 of Decree No. 108/2013/NĐ-CP shall be applied in cases of violation concerning the following information:

a) Information on material and technical facilities ensuring the performance of securities custody activities;

b) Information on business operations, assets, and financial status of the organization requesting a registration certificate for securities custody activities.

Upon discovering acts as prescribed in Clause 3, Article 5 and Clause 4, Article 14 of Decree No. 108/2013/NĐ-CP, the State Securities Commission and the Stock Exchange must prepare a record and seize documents belonging to the false registration dossier. In cases where the false documents are licenses, the State Securities Commission and the Stock Exchange must notify the licensing authority in writing.

2. The provisions of Clause 5, Article 6 of Decree No. 108/2013/NĐ-CP shall be applied in cases where an organization conducting a public offering of securities carries out such an offering when the State Securities Commission is still reviewing its public offering securities registration dossier and has not yet issued a public offering securities registration certificate to that organization.

3. The amount of fine applicable to violations as prescribed in Clause 5, Article 6 of Decree No. 108/2013/NĐ-CP shall be calculated based on unlawful revenue from the implementation of the violation. Unlawful revenue is the difference between the total amount received from the offering and the total value of the shares offered at the time of the offering, calculated according to their book value. If applying the maximum fine of five times the unlawful revenue results in a lower fine than the maximum fine applicable for issuing securities to the public without registering with the State Securities Commission as prescribed in Point c, Clause 4, Article 6 of Decree No. 108/2013/NĐ-CP, then the maximum fine prescribed in Point c, Clause 4, Article 6 of Decree No. 108/2013/NĐ-CP shall be applied.

The provisions of Point b, Clause 3, Article 9 of Decree No. 108/2013/NĐ-CP shall be applied in cases where the organization violating the regulation has been instructed to correct inaccurate information in the public company registration dossier but fails to do so or does not comply with the requirements of the State Securities Commission.

The supplementary administrative penalty form "Suspension of securities listing activities or securities transaction registration" stipulated in Clause 5, Article 14 of Decree No. 108/2013/ND-CP shall be applied to the act of preparing or confirming securities listing registration files or securities transaction registration files containing intentionally false information, concealing facts, or serious distortions, or the act of preparing or confirming forged files for listing or registering securities transactions when the Securities Exchange has already approved the listing or registration of securities for the violating entity.

1. The provisions of Clause 1 and Clause 2, Article 16 of Decree No. 108/2013/ND-CP shall apply to the case where any organization establishes any location or form of information exchange to execute matching orders for buying, selling, and trading securities outside the Securities Exchange.

2. In cases involving unlawful revenue, the amount of fine for violations of regulations on organizing securities trading markets shall be calculated based on the total revenue obtained from the implementation of the violation. If the maximum fine of five times the unlawful revenue is still lower than the maximum fine prescribed in Clause 1, Article 16 of Decree No. 108/2013/ND-CP, the authorized authority imposing the fine shall apply the maximum fine prescribed in Clause 1, Article 16 of Decree No. 108/2013/ND-CP.

Article 9. Violation of regulations on establishment and operation of securities business

2. "Conducting actions leading customers and investors to misunderstand the price of securities" stipulated in Point a, Clause 3, Article 21 of Decree No. 108/2013/ND-CP refers to the act of a securities company intentionally providing customers and investors with inaccurate, incomplete, or unsubstantiated information, making judgments, giving advice, or recommendations that conceal the truth about prices or factors affecting the prices of one or more types of securities, causing customers and investors to misunderstand the price of securities and make incorrect investment decisions.

Article 10. Violation of regulations on insider trading and market manipulation in securities trading

2. When considering the amount of illegal profit in cases of insider trading or market manipulation in securities trading, if the value of the illegal profit or the degree of damage caused by the violation reaches the level requiring criminal responsibility, the file must be transferred to the criminal proceedings agency for consideration of criminal liability in accordance with Article 62 of the Law on Handling Administrative Violations.

Chapter III

AUTHORITY AND PROCEDURES FOR IMPOSING ADMINISTRATIVE PENALTIES FOR VIOLATIONS

Article 11. Determination of the Authority to Impose Administrative Penalties

In cases where administrative violations in the securities and securities market sector are discovered, the Chairman of the State Securities Commission shall impose penalties according to the authority prescribed in Clause 1 of Article 37 of Decree No. 108/2013/NĐ-CP, except for cases where the administrative violation is detected through specialized inspection activities, in which case the authority to impose penalties belongs to the Head of the specialized inspection team of the State Securities Commission.

Article 12. Delegation of the Authority to Impose Penalties, Issue Enforcement Decisions, and Apply Remedial Measures

The Chairman of the State Securities Commission and the Inspector General of the State Securities Commission may delegate their subordinates to exercise the authority to impose administrative penalties and enforce decisions on administrative penalties or decisions applying remedial measures in the securities and securities market sector.

Article 13. Transfer of Violation Case Files with Signs of Criminal Offenses for Criminal Liability Pursuit

1. During the process of examining a violation case to decide on imposing an administrative penalty or after issuing a decision on an administrative penalty, if it is found that the violation has signs of a criminal offense, the person authorized to impose penalties must immediately transfer the violation case file to the criminal prosecution agency.

If the violator is currently executing an administrative penalty decision and a criminal offense sign is discovered before the statute of limitations for criminal liability expires, the person who issued the administrative penalty decision must issue a decision to temporarily suspend the execution of the administrative penalty decision. Within three days from the date the temporary suspension decision takes effect, the person who issued the administrative penalty decision must transfer the violation case file to the criminal prosecution agency while simultaneously notifying the violator in writing.

2. The criminal prosecution agency is responsible for reviewing, concluding the case, and responding in writing to the results of the resolution to the person who transferred the file within the time limit stipulated by criminal procedure law. If there is no initiation of a criminal case, within three days from the date of the decision not to initiate a criminal case, the criminal prosecution agency must return the case file to the person who transferred the file for administrative penalty.

3. If the criminal prosecution agency notifies about the decision to initiate a criminal case, the person authorized to impose penalties must transfer the original violation case file to the criminal prosecution agency within five days from the date of receipt of the notification; if an administrative penalty decision has already been issued, the person issuing the decision must revoke the administrative penalty decision.

Article 14. Transfer of Cases to the Person Authorized to Impose Administrative Penalties

1. National management agencies, during the course of inspections and checks on individuals and organizations, if they discover administrative violations in the securities and securities market sector but such violations are outside their authority to impose penalties, must transfer the entire case file and propose handling in writing to the State Securities Commission for resolution.

The file includes: Original record of the administrative violation (original), relevant documents, data, evidence collected during the inspection and check related to administrative violations in the securities and securities market sector.

2. For administrative violation cases in the securities and securities market sector transferred by national management agencies, the State Securities Commission is responsible for accepting the entire case file and documents related to the administrative violation case and handling it as follows:

a) In cases where the files, documents, and evidence are insufficient to impose an administrative penalty, additional verification of circumstances serving as the basis for the penalty decision or conducting inspections and checks to clarify the violation should be carried out;

b) In cases where the administrative violation case files, documents, and records transferred comply with the prescribed procedures and have sufficient grounds to prove and conclude the administrative violation, an administrative violation record should be established and an administrative penalty decision made in accordance with the law.

Article 15. Recording Administrative Violations and Issuing Administrative Sanction Decisions

1. In cases where administrative violations fall outside the authority or exceed the authority to impose sanctions of the person recording the violation, such person must transfer the entire violation file to the competent authority for sanctioning within two working days from the date of recording the administrative violation.

The violation file includes:

a) The administrative violation record (original);

b) Draft Decision on Administrative Sanctions;

c) Relevant files and documents related to the violation;

d) Record of confiscation of evidence and means of administrative violations (if any);

đ) Other necessary documents.

2. The administrative violation record must contain all contents as prescribed in Clause 2, Article 58 of the Law on Handling Administrative Violations. In cases where the exact location of the violation cannot be determined, the location where the violation is handled shall be recorded. If the violator or representative of the violating organization is not present at the location of the violation or intentionally avoids or refuses to sign the record, the person recording the violation must clearly state the reason in the record, collect evidence of the violation, issue a sanction decision or transfer the violation file to the competent authority for sanctioning.

3. In cases where the violation has been recorded but no sanction decision has been issued, and the individual or organization does not comply with the request, conclusion, or decision of the Chairman of the State Securities Commission's Inspectorate or the Head of the specialized inspection team of the State Securities Commission, and continues to intentionally commit the violation, the Chairman of the State Securities Commission's Inspectorate or the Head of the specialized inspection team of the State Securities Commission must report to the Chairman of the State Securities Commission to apply preventive measures such as temporarily withholding licenses or professional certificates in the securities and stock market sector according to the administrative procedures stipulated in Articles 125 and 126 of the Law on Handling Administrative Violations to ensure that the violation ceases. In this case, when issuing the administrative sanction decision, additional aggravating circumstances as prescribed in Point i, Clause 1, Article 10 of the Law on Handling Administrative Violations may be applied, or sanctions may be imposed for non-compliance with the request, conclusion, or decision of the inspection team as prescribed in Point c, Clause 1, Article 36 of Decree No. 108/2013/NĐ-CP when the Head of the Inspection Team is performing official duties.

1. Within three working days from the date of issuance of the administrative sanction decision in the securities and stock market sector, the sanction decision must be announced on the electronic information website of the State Securities Commission. In cases where the sanctioned entity is a trading member, listed organization, or registered securities trading organization, the sanction decision must also be simultaneously announced on the electronic information website of the Stock Exchange.

2. The content of the announcement includes: name, address, occupation of the violator or name, address of the violating organization, administrative violation behavior, form of punishment, remedial measures.

Chapter IV

ENFORCEMENT OF SANCTION DECISIONS

ADMINISTRATIVE VIOLATIONS IN THE SECURITIES SECTOR

AND STOCK MARKET

Article 17. Competence to decide on enforcement

1. The Chairman of the State Securities Commission shall issue decisions on enforcement and organize the enforcement of administrative penalty decisions and decisions applying measures to remedy consequences issued by himself.

2. The Chairman of the State Securities Commission has the authority to issue decisions on enforcement and organize enforcement in the following cases:

a) Administrative penalty decisions and decisions applying measures to remedy consequences issued by himself;

b) Administrative penalty decisions and decisions applying measures to remedy consequences issued by the Chairman of the State Securities Commission but lacking the necessary manpower and means to organize the enforcement of the decision and having submitted a written request to the Chairman of the State Securities Commission for issuance of an enforcement decision;

c) Administrative penalty decisions and decisions applying measures to remedy consequences issued by the Head of the specialized inspection team of the State Securities Commission.

Article 18. Enforcement Measures

1. Enforcement measures to implement administrative penalty decisions in the securities and securities market sector include:

a) Deducting part of salary or income; deducting money from bank accounts;

b) Seizing assets of equivalent value to the fine amount for auction; seizing securities of equivalent value to the fine amount;

c) Collecting money and property of the person subject to enforcement that are held by other individuals or organizations when such individuals or organizations deliberately dissipate assets after committing violations;

2. In cases where individuals or organizations must enforce decisions compelling the return of unlawful gains obtained through administrative violations and the individual or organization subject to enforcement has not been able to immediately implement this, the authorized decision-maker shall apply one of the measures specified in Points a, b, and c of Clause 1 of this Article.

Chapter V

IMPLEMENTATION

Article 19. Responsibility for Implementation

1. This Circular takes effect from March 1, 2014, and replaces Circular No. 37/2011/TT-BTC dated March 16, 2011, of the Ministry of Finance guiding the implementation of certain provisions of Decree No. 85/2010/NĐ-CP dated August 2, 2010, of the Government on administrative penalties in the securities and securities market sectors.

2. The Chairman of the State Securities Commission is responsible for organizing and directing the implementation of administrative penalties in the securities and securities market sectors in accordance with the provisions of the law.

3. During the implementation process, if there are difficulties or obstacles, they are requested to be reported promptly to the Ministry of Finance for consideration and resolution.