Truong Duy Son, former chairman of Hanoi-based securities firm Ha Thanh, has allegedly disappeared, leaving a large debt of more than VND100 billion (US$5 million). Dau Tu Tai Chinh Newspaper has interviewed Pham Hong Son, head of the State Securities Commission's fund management division, about the issue.
Dau Tu Tai Chinh Newspaper: There are opinions that Truong Duy Son’s disappearance related to the financial condition of brokerage Ha Thanh and its clients. What do the State Securities Commission think about the opinions after inspecting the firm?
Pham Hong Son: According to the securities firm, Son and some others earlier created some accounts to trade stocks. The amount of VND100 billion was mainly loans against shares from credit institutions.
Authorities are now investigating more on the case. Ha Thanh Securities Company has announced that its operation remains normal in spite of the fraud.
Statistics from the brokerage show its account balance amounts to VND38 billion ($1.9 million) and the equity reaches over VND80 billion compared to the start-up capital of VND150 billion.
What is your opinion about the securities firm Ha Thanh after the fraud was found? Can you point out the difficulties that brokerages are coping with?
According to the State Securities Commission’s first investigations, Ha Thanh’s management is dramatically bad and its financial condition is negative, enabling the former chairman to manipulate the entire company.
Securities firms are patiently trying their best to survive the dull time by restructuring their operation and reducing expenses. The market watchdog still keeps close eyes on them.
How is the operation of securities firms?
Up to 15 securities companies have been put in scrutiny. The State Securities Commission has asked those firms to report their business operation and set up solutions, which have to be approved by the board of directors.
The market watchdog will inspect brokerages, which fail to report explicit their operation.
Many securities firms were established in the period of 2006 and 2007, when the stock market was significantly bullish. However, they now find themselves struggle with the harsh competition of the financial sector, which requires brokerages to strictly manage risks and constantly improve the business management.
The State Securities Commission is setting up a circular, which will regulate that securities firms have to open trading accounts at banks, which are used for trading shares of clients. The accounts will be separate from the brokerages’ accounts.
