VietNamNet Bridge – Suspending the operation of securities companies is the heaviest handed punishment imposed on unprofitable companies. However, the punishment does not have much significance.

The State Securities Commission (SSC) has suspended the operation of the Trang An Securities Company for 6 months, from April 16 to October 16.

The decision is not a surprise to anyone at all. With what Trang An has done – losing liquidity and making wrongdoings with customers’ accounts – it deserves the punishment. However, the problem that the decision on the operation suspension was released too late, only after its wrongdoings caused serious consequences.

Suspending operation aims to avoid the risks for Trang An’s customers, because the securities company does not have any more opportunities to break the law. However, in fact, even if the punishment had not been made, Trang An would not have been able to continue its operation, because the customers have run away from the company already, while no new customer has appeared.

Prior to that, in October 2012, Truong Son Securities and Hanoi Securities also received the same punishment – having their operation suspended for six months.

The suspension only got expired in late April 2013. However, no one can say that Truong Son and Hanoi would be better after the suspension. Like Trang An, both Truong Son and Hanoi are the incurable. Meanwhile, it’s not easy to force the securities companies which incur big losses or lose the liquidity to go bankrupt or dissolved.

Analysts have commented that the State Securities Commission (SSC) cannot do any further than it did, and that the watchdog agency just could do the things stipulated by the laws.

In order to control securities companies with a heavy hand, analysts say, the watchdog agency needs to be more flexible in assessing the operation of securities companies.

At present, SSC assesses the operation of securities companies in accordance with the financial indexes and standards. However, an expert frankly said that though the standards are necessary, they are not sufficient for the management agencies to make conclusions about the situations of enterprises.

He said that if referring to the set standards, SSC will only have the right to make punishment when the problems become too serious and incurable. In this case, the punishment cannot deter enterprises and prevent risks.

For example, a securities company, though having the financial safety ratio meeting the requirements (200, 300 percent or more) still can profiteer with the investors’ accounts.

Once the investors’ money at securities companies is not safe, the securities companies must not be considered as “financially safe.” It’s now not easy to find out the activities of profiteering because of the complicated mechanism of transaction and money management.

Under the current regulations, when securities companies are found as committing short sales, thus affecting the market, they will bear the pecuniary penalty. However, experts believe that in this case, they should be imposed a heavy punishment. Restricting the operation activities of the companies for a certain period has been suggested to punish the companies.

Vietnam now has nearly 100 operational securities companies, but analysts believe that 2/3 of them have been unprofitable and need to be restructured.

DNSG