Circular No. 217/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the administrative violations in securities and securities market

THE MINISTRY OF FINANCE

Circular No. 217/2013/TT-BTC dated December 31, 2013 of the Ministry of Finance guiding the administrative violations in securities and securities market

Pursuant to the Law on Securities dated June 29, 2006 and the Law amending and supplementing a number of articles of Securities Law November 24, 2010;

Pursuant to the Law on handling of administrative violations dated June 20, 2012;

Pursuant to the Decree No. 81/2003/ND-CP dated July 19, 2013 of the Government, detailing a number of Articles and measures to exercise the Law on handling of administrative violations;

Pursuant to the Decree No. 108/2013/ND-CP dated August 23, 2013 of the Government administrative violation sanction in securities and securities market;

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

At the proposal of Chairperson of State Securities Commission,

Minister of Finance issues Circular guiding the administrative violations in securities and securities market.

Chapter 1.

GENERAL PROVISIONS

Article 1. Subjects of application

1. Individuals and organizations committing acts of administrative violations in securities and securities market.

2. Individuals and organizations related to administrative violation sanction in securities and securities market.

Article 2.  Limitations of sanction

1. Limitations for administrative violation sanction in securities and securities market shall be 02 years from the day of ending violations for the administrative violations, which have been terminated, or from the day of detecting violations for administrative violations, which are being performed. Date of detecting an administrative violation shall be date of making written record of that administrative violation.

2. Determination of limitations for sanction against some violations shall be guided specifically as follows:

a) For violations of regulations on sale offer and issue of securities at points b, c and d Clause 3 Article 4, Clause 4 and Clause 5 Article 6, Clause 2 Article 7 of the Government’s Decree No. 108/2013/ND-CP dated September 23, 2013, on administrative violation sanction in securities and securities market (hereinafter abbreviated to Decree No. 108/2013/ND-CP), day of ending violation for calculation of limitations for sanction shall be day of ending collection of money for securities purchase. For violations specified at Clause 2 article 6 of Decree No. 108/2013/ND-CP, limitations for sanction shall be calculated from the day securities have been offered for sale to public, put into listing or registered transaction for violations which have been ended or from the day of making written record of violation for violations which are been performed;

b) For violations of regulations on dossier of registering public company specified at Clause 1, Clause 2 and point a Clause 3 article 9 of Decree No. 108/2013/ND-CP, limitations for sanction shall be calculated from the day of making written record of violation involving dossier of registration for public company;

c) For acts of reporting, disclosing information later than the prescribed time, failing to report, disclose information as prescribed or at the requests, time to determine a violation has been performed shall be the next day of day ending time limit of report or information disclosure as prescribed or at the requests.

d During time limit prescribed in Clause 1 this Article, if individuals and organizations deliberately evade, obstruct the sanction, limitations for administrative violation sanction shall be re-calculated  from the day of ending acts of evading, obstructing sanction. Day of ending act of evading, obstructing the sanction shall be date when the infringing individuals, organizations in self-conscious way, report and accept implementation of sanction forms against administrative violations in securities and securities market. Competent persons on duty must make written record of this event, keep a copy in dossier of violation and hand over a copy to the fringing individuals and organizations. 

Article 3. Form of fines and remedial measures

1. Determination of fines applicable to Individuals and organizations committing violations in securities and securities market shall be guided specifically as follows:

The specific fine level for a violation shall be the average of the fine bracket prescribed for that act. The average of the fine bracket shall be determined by dual of total minimum fine level and maximum fine level of the fine bracket.

2. State Securities Commission shall perform determination of illegal benefits from committing administrative violations in securities and securities market.

State Securities Commission shall elaborate measure to calculate the illegal benefits from committing administrative violations in securities and securities market in line with actual situations and specific cases.

3. The recall of securities already offered for sale, issued and the refund of amounts used for securities purchase to investors specified at point a Clause 3 Article 3 of Decree No. 108/2013/ND-CP shall perform as follows:

a) Within 01 working day, after receiving decisions on sanction of administrative violations, the infringing individuals and organizations must publicize on 01 central newspaper in 03 continuous issues and on websites of their companies about the refund of amounts used for securities sale or deposit (if any) added interests by interest rate of no-term deposit of banks where the infringing individuals and organizations open accounts to collect amounts from securities purchase or deposit. Interest of amounts used for securities purchase or deposit which the infringing individuals and organizations must refund to investors shall be calculated from date when investors pay amounts until the infringing individuals and organizations refund them to investors.  In case where an investor has transferred securities purchased in sale offer mentioned above in a legal method, the infringing individuals and organizations shall determine investors received securities before time of notification about refund of amounts and quantity of securities which are held by such persons to notify such investors;

b) The fringing individuals and organizations must report to State Securities Commission about result of refund of amounts used for securities purchase to investors, within 03 working days after finishing the refund to investors.

Chapter II

VIOLATIONS, FORMS AND LEVELS OF SANCTIONS

Article 4.Violations of regulations on dossier of registration for sale offer; dossier of issuing securities; dossier of establishing member’s fund; dossier of registration for listing, transaction of securities; dossier of requesting for grant, supplementation of permission for establishment and operation; dossier of registration for establishment of separate securities investment company self managing capital; dossier of requesting for grant of certificate of registration for operation of representative office; dossier of registration for securities depository, branch operating depository 

1. Provisions in point a Clause 3 Article 4, clause 2 Article 5, Clause 3 Article 7 and point a Clause 2 Article 8 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving the following information:

a) Information of business operation, assets, financial conditions of the issuing organization;

b) Information of conditions for sale offer, issuing, plan on issue and plan on using capital collected from sale offer, issue;

c) Information and legal papers related to use of capital for investment, trading and development of real estate projects;

d) Information about commitment for issue guarantee;

dd) Information of commitment in implementation of organizations possessing securities of sale offer or issue; information of disputes, sues involving organizations possessing securities of sale offer or issue, that may affect price of securities of sale offer or issue;  

e) Information of list of Mother Company, subsidiary companies of the issuing organizations, companies in which the issuing organizations are holding control right or dominant shares, companies which are holding control right or dominant shares of the issuing organizations.

2. Provisions in Clause 3 Article 14, and clause 4 Article 15 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving the following information:

a) Information of conditions for listing, conditions for transaction registration;

b) Information of business operation, assets, financial conditions of the issuing organization, organizations registering for transaction;

c) Information of commitment in implementation of obligations for investors by the listing organization, organizations registering for transaction;

d) Information of commitment of payment guarantee or written record determining value of collateral and papers regarding lawful ownership, insurance contracts for those assets in case of listing bonds with guarantee;

dd) Information of report of investment result of funds and public securities investment companies confirmed by Custodian Bank;

e) Information of list of Mother Company, subsidiary companies of the issuing organizations, organizations registering transaction, companies in which the listing organizations, organizations registering transaction are holding control right or dominant shares, companies which are holding control right or dominant shares of the listing organizations, organizations registering transaction.

3. Provisions at Clause 7 Article 20 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving the following information:

a) Information of conditions for licenses of establishment and operation of securities companies, fund management companies, separate securities investment companies entrusted for capital management, Vietnam-based branches of foreign securities companies and fund management companies;

b) Information of business operation, assets, financial conditions of organization requesting or grant or supplementation of license.

4. Provisions at Clause 7 Article 23 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving information regarding conditions for licensing of establishment and operation of separate securities investment companies self managing capital.

5. Provisions at point a Clause 4 Article 24 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving the following information:

a) Information of conditions for grant of certificate of registration for operation of representative office;

b) Information of person expected to appoint as head of representative office.

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

a) Information of minimum contributed capital;

b) Information of capital contribution members.

7. Provisions at Clause 3 Article 30 of Decree No. 108/2013/ND-CP shall apply in cases of violation involving the following information:

a) Information of material and technical facilities to ensure implementation of securities depository;

b) Information of business activities, assets, financial conditions of organizations requesting for grant of certificate of registration for securities depository.

8. Acts of “making, confirming dossier of securities sale offer to public with forgery” at Clause 3 Article 5 of Decree No. 108/2013/ND-CP and acts of “making, confirming forged dossier for listing securities or registering for securities transaction” at Clause 4 Article 14 of Decree No. 108/2013/ND-CP are acts of making or confirming documents, information that are not true or not exact to register for sale offer of securities to public, register for listing or register for securities transaction.

When detecting acts specified at Clause 3 Article 5, Clause 4 Article 14 of Decree No. 108/2013/ND-CP, State Securities Commission, the Stock Exchange (SE) must make written record to confiscate papers in the forged dossiers. In case where the forged papers are licenses, State Securities Commission, the Stock Exchange (SE) must notify in writing agencies issuing licenses.

Article 5. Violations on sale offer to public

1. Acts of “using information outside of prospectus or information be wrong in comparison with information in prospectus to explore market before being permitted securities sale offer to public” at point a Clause 1 Article 6 of Decree No. 108/2013/ND-CP are use of information not stated in prospectus or not exact with content in prospectus in dossier of registration for securities sale offer to pubic in order to explore market before being permitted implementing the securities sale offer to public.

2. Provision at clause 5 Article 6 of Decree No. 108/2013/ND-CP shall be applied in case where an organization registering for securities sale offer to public implement the securities sale offer to public while State Securities Commission is considering dossier of registering for securities sale offer to public of that organization and has not yet granted certificate of securities sale offer to public for that organization.

3. The fines applying to violations specified at Clause 5 article 6 of Decree No. 108/2013/ND-CP shall be counted on the basis of illegal revenues from committing violations.  The illegal revenues are differences between total revenues from sale offer and total values counted on value of booking of the shares already offered for sale at time of sale offer. If the maximum fine equal to 05 times of illegal revenues has been applied but the fine still be lower than the maximum fine applicable to act of securities sale offer to public but not register with State Securities Commission specified at point c Clause 4 Article 6 of Decree No. 108/2013/ND-CP, the maximum fine level specified at point c Clause 4 Article 6 of Decree No. 108/2013/ND-CP shall be applied for sanction.

Article 6. Violations on submission of public company registration’s dossier

Provision at point b clause 3 Article 9 of Decree No. 108/2013/ND-CP shall be applied in case where an infringing organization has been guided for amending the inexact information in dossier of public company registration but it fail to perform or perform improperly with requirements of State Securities Commission.

Article 7. Violations on listing and registering of securities transactions

Form of additional sanction, which is “ suspension of activities involving listing of securities or registration for securities transactions at Clause 5 Article 14 of Decree No. 108/2013/ND-CP shall be applied to acts of making, confirming of dossier of registration for listing securities or registration for securities transactions with information deliberately made in contrary to the truth, hiding the truth or seriously falsified or acts of making, confirming the forged dossiers to list, register securities transactions in case where the Stock Exchange (SE) has accepted the listing, registration of securities transactions for the infringing organization.

Article 8. Violations on organization of securities transaction market

1. Provisions at Clause 1 and Clause 2 Article 16 of Decree No. 108/2013/ND-CP are applied to case organizing any place or any form of information exchange for matching orders of securities purchase, sale and transaction outside the Stock Exchange (SE).

2. Case of having illegal revenues, the fines applying to violations of regulations on organizing securities transaction market shall be counted on the basis of all revenues that organization obtained from committing violations.  If the maximum fine equal to 05 times of illegal revenues has been applied but the fine still be lower than the maximum fine prescribed at Clause 1 Article 16 of Decree No. 108/2013/ND-CP, persons competent to sanction shall apply the maximum fine level specified at Clause 1 Article 16 of Decree No. 108/2013/ND-CP for sanction.

Article 9. Violations on securities’ establishment and business operation

1. Acts of “using name or changing name of companies, branches, representative offices, transaction offices in contrary to legislations” at Clause 1 Article 20 of Decree No. 108/2013/ND-CP are acts of securities companies, fund management companies, securities investment companies, Vietnam-based branches of foreign securities companies or fund management companies that use name inconsistent with name stated in license of establishment and operation, written approval for opening branches, representative offices, or transaction offices.

2. “Committing acts confusing on securities prices for customers and investment” prescribed at point a Clause 3 Article 21 of Decree No. 108/2013/ND-CP means acts of securities companies which deliberately supply to customers and investors information, give out opinions, consultancy or recommendation that are insufficient, without base, hide the truth on price or elements affecting to price of one or many securities kinds resulted that customers and investors misunderstand about securities price and make incorrect decisions in their investment.

Article 10. Violations on internal transaction and transactions manipulating the securities market

1. The illegal benefits obtained from committing violations specified at Clause 1 and Clause 3 Article 29 of Decree No. 108/2013/ND-CP are benefits arising from implementation of internal transactions or transactions manipulating the securities market, after deducting the payable taxes and charges.   If a person uses many accounts for internal transactions or transactions manipulating securities market, the illegal benefits shall be counted on total accounts used for such transactions.   If a group of persons collaborating, colluding in internal transactions or transactions manipulating securities market, the illegal benefits shall be counted on each account used for such transactions.

2. When considering the illegal benefits for acts of internal transactions or transactions manipulating securities market, if value of the illegal benefits or level of damages of violations up to the level of criminal prosecution, dossiers must be forwarded to criminal proceedings agencies for consideration of criminal prosecution as prescribed at Article 62 of Law on handling administrative violations.

Chapter III

AUTHORITY AND PROCEDURES FOR ADMINISTRATIVE VIOLATIONS SANCTION

Article 11. Delimitation of sanction authority

Case of detecting administrative violations in securities and securities market, the Chief Inspector of State Securities Commission shall sanction under his authority prescribed at clause 1 Article 37 of Decree No. 108/2013/ND-CP, except case where administrative violations are detected through specialized inspection activities, the head of specialized inspection team of State Securities Commission shall have sanction authority.

Article 12. Assignment of sanction’s right, decision issuance on remedial measure’s enforcement and application

Chairperson of State Securities Commission and the Chief Inspector of State Securities Commission may assign their deputies to perform the authority to impose sanctions against administrative violations and enforce implementation of decisions on sanction against administrative violations or decide on application of remedial measures in securities and securities market.

Article 13. Forwarding violation case’s dossier with signs of criminal prosecution

1. During considering violation cases to decide on administrative violation sanction or in case of having already issued decision on sanction of administrative violations, if considering that  violations have criminal signs, persons competent to sanction must forward dossier of violation to criminal proceedings agencies.

In case where an infringing individual is executing decision on sanction, if detecting violations with criminal sign and limitations for criminal prosecution is not over, person issuing decision on sanction of administrative violation must issue decision on temporarily suspending implementation of decision on sanction of administrative violations.  Within 03 days, from the effective day of decision on temporary suspension, person issuing decision on administrative violation sanction must forward dossier of case to criminal proceedings agencies and notify the infringing individual in writing.

2. The criminal proceedings agencies shall consider and conclude on case and answer result of settlement in writing to competent person forwarded dossier in time limit as prescribed by law on criminal procedures.  If refusal for prosecution of criminal case, within 03 days, from the day of decision on refusal for prosecution of criminal case, criminal proceedings agencies must return dossier of case to person competent to sanction already forwarded dossier previously. 

3. In case where criminal proceedings agencies notify about decision on prosecution of criminal case, the person competent to sanction must forward the original dossier of case to criminal proceedings agencies within 05 days, from the day of receiving notification; if decision on administrative violation sanction has been issued, the person issuing decision on sanction must cancel this decision.

Article 14. Case transfer to competent persons to administrative violation sanction

1. State management agencies, during inspection, check over individuals and organizations, if they detect administrative violations in securities and securities market but not in their sanction authority, they must transfer entire dossier of case and propose handling in writing to State Securities Commission for settlement.

Dossier consists of:  Written record of administrative violations (original), documents, data, evidences related to administrative violations in securities and securities market already collected during inspection and check.

2. For cases of administrative violations in securities and securities market transferred by state management agencies, State Securities Commission shall receive entire dossier, documents of those administrative violations and handle as follows:

a) If dossiers, documents and evidences are insufficient as basis for sanction of administrative violations, it shall verify additionally facts as basis for issuing decisions on sanction or conducting inspection, check to clarify acts of violation;

b) If the transferred dossiers, documents, written records of administrative violations are consistent with the prescribed procedures and have basis to prove, conclude on administrative violations, it shall make a written record of administrative violations and issue decision on sanction as prescribed by law.

Article 15. Written record of administrative violations and decision issuance on administrative violation sanction

1. In case where an administrative violation does not fall in authority or beyond sanction authority of person making written record, he must forward entire dossier of violation to person competent to sanction within 02 working days, after making a written record of administrative violation.

Dossier of violation consists of:

a) Written record of administrative violation (original);

b) Draft of decision on sanction of administrative violation;

c) Dossiers and documents related to that violation;

d) Written record of confiscating material evidences and means of administrative violation (if any);

dd) Other necessary documents.

2. A written record of administrative violation must have sufficient contents as prescribed at Clause 2 Article 58 of Law on handling of administrative violations.  For cases of failing to identify exact location where violation happens, writing location where violation is handled. If the violator, representative of the infringing organization is not present at place of violation or deliberately evade or refuse for signing on written record, the person making written record must clearly write reason in written record, collect evidences of violation, issue a decision on sanction or transfer dossier of violation to person competent to sanction.

3. In case where written record of violation has been made but decision on sanction has not yet issued and individual or organization fails to implement requirement, conclusion, or decision of the Chief Inspector of State Securities Commission or head of specialized inspection team of State Securities Commission, still deliberately commit that violation, the Chief Inspector of State Securities Commission or head of specialized inspection team of State Securities Commission must report to Chairperson of State Securities Commission to apply preventive measures such as impound of license, practice certificate in securities and securities market according to administrative procedures prescribed in Article 125 and Article 126 of Law on handling of administrative violations in order to ensure the violation must be terminated. For this case, after issuing decision on sanction of administrative violation, it may apply additionally aggravating circumstances specified at point i Clause 1 Article 10 of Law on handling of administrative violations or sanction against act of failing to comply with requirements, conclusions, decisions of inspection team as prescribed at point c Clause 1 Article 36 of Decree No. 108/2013/ND-CP in case where head of inspection team is on duty.

4. Decision on sanction must be signed by chairperson of State Securities Commission or the Chief Inspector of State Securities Commission or head of specialized inspection team of State Securities Commission, and fixed with seal of State Securities Commission.

Article 16. Information disclosure of decisions on administrative violation sanction

1. Within 03 working days, after issuing decision on administrative violation sanction in securities and securities market, decision must be published on website of State Securities Commission.  If the sanctioned persons are members in transaction, the listing organization, the organization registering securities transactions, decisions on sanction must be announced concurrently on website of the Stock Exchange (SE).

2. Content of the disclosed information includes: Full name, occupation of the infringing persons or name, address of the infringing organization, administrative violation, sanction forms and remedial measures.

Chapter IV

DECISION ENFORCEMENT ON ADMINISTRATIVE VIOLATION SANCTION IN SECURITIES AND SECURITIES MARKET

Article 17. Authority to issue enforcement decision

1. The Chief Inspector of State Securities Commission shall issue decision on enforcement and organize enforcement to execute decision on sanction of administrative violations, decision on application of remedial measures  already been issued by himself.

2. Chairperson of State Securities Commission has authority to issue decision on enforcement and organize enforcement in the following cases:

a) Decision on sanction of administrative violations, decision on application of remedial measures already been issued by himself;

b) Decision on sanction of administrative violations, decision on application of remedial measures which are issued by the Chief Inspector of State Securities Commission but not eligible of forces, means to organize implementation of decision on enforcement and have written request to chairperson of State Securities Commission for issuing decision on enforcement.

c) Decision on sanction of administrative violations, decision on application of remedial measures already been issued by head of specialized inspection team of State Securities Commission;

Article 18. Coercive measures

1. Coercive measures in implementation of decision on administrative violation sanction securities and securities market include:

a) Deduction of a part of salary or income; deduction of money in account at bank;

b) Distrainment of assets valued equivalent to the fines for auction; distrainment of securities valued equivalent to the fines;

c) Collection of money and assets of persons enforced which are kept by other individuals and organizations in case where individuals and organizations deliberately dispersing assets after committing violations

d) Applying other coercive measures to force application of remedial measures prescribed at Clause 3 Article 3 of Decree No. 108/2013/ND-CP.

2. In case where individuals and organizations must implement decision on enforcement forcing remittance of illegal benefits gained from committing administrative violations but the enforced individuals and organizations fail to implement immediately, the person competent to issue decision on enforcement shall apply one of measures stated in points a, b and c clause 1 of this Article. 

Chapter V

IMPLEMENTATION ORGANIZATION

Article 19. Implementation responsibilities

1. This Circular takes effect on March 01, 2014 and replaces Circular No. 37/2011/TT-BTC  dated March 16, 2011, of the Ministry of Finance, guiding implementation of a number of Articles of the Government’s Decree No. 85/2010/ND-CP dated August 02, 2010, administrative violation sanction in securities and securities market.

2. Chairperson of State Securities Commission shall organize and direct administrative violation sanction in securities and securities market in accordance with law.

3. Any arising problems in the course of implementation, should be reported to the Ministry of Finance for consideration and settlement.

For the Minister

Deputy Minister

Tran Xuan Ha