Investors and experts have applauded the State Securities Commission’s recent decision to impose the highest possible fine on three market manipulators.

However, even the maximum fine is no deterrent considering the huge profits made, they say, calling for much tougher measures.

On March 24, Thai Thuy Tuyet Ngan, Nguyen Van Vinh, and Do Thi Thanh Thuy were each slapped with a VND300 million (US$14,000) fine for manipulating the share prices of Cai Lay Veterinary Pharmaceutical JSC last year.

According to the State Securities Commission, the three individuals used not only their own stock accounts but also that of many other people and coordinated with each other to “artificially” create demand by buying a large number of Cai Lay shares between April 1 and December 24 last year.

Thanks to their scam, Cai Lay shares spiked to a record VND76,000 in late August, more than six times the VND12,000 it stood at on April 1. The group then dumped the shares to pocket the profit, sending their value crashing at the end of 2010.

It is still unclear how much money the three individuals earned through their actions.

Both Nguyen Anh Tuan, deputy head of brokerage at Viet Dragon Securities Corp., and Nguyen Manh Toan, deputy general director of VinaGlobal Securities Corporation, said Tuesday (April 5) that they could not estimate the group’s illegal profits as the number of shares its members purchased and sold off is unknown.

Many stock market investors said they were sure that the manipulation has netted huge sums of money for Ngan, Vinh and Thuy as the illegal actions occurred over a period of more than eight months.

While the fines may be puny compared to the profits fraudulently raked in by the trio, it is still the first time that the highest administrative fine for stock market manipulation is being levied since Vietnam opened a stock exchange in 2000.

Economist Dinh The Hien said the fine has sent a clear message: the State Securities Commission is clamping down on stock fraud.

The first person in Vietnam to be arrested on charge of manipulating stock prices has been in custody since last December pending investigation of his stock transactions.

Le Van Dung, former chairman of Vien Dong Pharma JSC, and several collaborators allegedly created false demand by purchasing a large number of shares in Ha Tay Pharmaceutical JSC in May and June last year.

Ha Tay’s stock then fell sharply in August when a total of nearly two million shares were registered for sale at the same time.

Hien said the State Securities Commission should raise fines imposed on stock violators to between 4-5 times the illegal profit earned if they are to act as a deterrent.

“Such rates are used in securities and tax sectors in many foreign countries,” he said.

Hien also suggested the securities watchdog seize profits gained though fraud, suspend violators and ban them from trading in stocks.

Meanwhile, Truong Duy Khiem, director of an ACB Securities branch, said inside shareholders should be subject to stricter penalties than outside investors.

“Fraud made by inside shareholders is more dangerous than what is done by outside players as the former know the company’s activities very well,” he said.