Investors lose money because of illegal gold trading transaction

The government banned gold trading on accounts since March 30 this year but some firms have illegally continued the practice, causing many people to lose billions Vietnamese dong.

The government’s ban aimed to reduce risks for both investors and the country’s financial system.

Most investors in Hanoi and Ho Chi Minh cities stopped trading gold on accounts because it had become illegal and also contained high risks. But many of the firms have moved to neighboring provinces, including Ba Ria – Vung Tau, Long An, and Daklak, to lure new investors, saying the central bank has allowed gold exchanges to resume operations as it continuously permitted financial organizations to extend and prolong the closure of offshore accounts.

In order to strengthen investor confidence, these firms advanced clients tens of thousands of dollars to open accounts for trading in gold, in the process trapping several investors.

N.T.T.Ng, an investor in Vung Tau City, signed a contract with STC Company through its brokerage agent on June 16. The company gave her two trading codes 206888 and 206889 to trade gold online on the global bullion market at its website at www.gsj.com.vn.

The company said it would advance her US$350,000 on two accounts. Each account would be allowed to trade in 50 lots of gold, a standard lot worth $100,000 and a mini lot worth $10,000.

On the evening of June 16, considering it an appropriate time to invest in gold, Ms. Ng. called H.T.N.T, STC’s agent in Vung Tau City, to open a trading account for her. However, T. and T.T.N, deputy director of STC Co., said that they were not able to open an account for her because it was “outside working hours” and asked her to carry out transactions on two already existing accounts belonging to Chiem Ngoc Hung and Vo Ha Xuyen.

The next evening, June 17, Ms. Ng. placed orders to sell 50 lots at $1,233 and $1,235 an ounce. But after the prices moved to her benefits, the two accounts were blocked suddenly. All the take-profit and stop-loss orders were cut, causing losses of more than $147,000. In addition, Ms. Ng. did not receive her profit of $50,000 from the transactions she initiated.

Although the two accounts were blocked, brokers urged her to deposit more money to resume trading for them. Ms. Ng. sent VND5.8 billion to the STC Co. through banks from June 18 to 21, but two accounts remained blocked as of 7 am on June 21. She complained and reclaimed her money, but the company refused to pay her.

According to a former employee of STC Co., the company uses many tricks. When the market moves inversely to investors’ speculation, the company terminates investors’ accounts if the latter do not deposit money quickly to make up their loss. When the market moves to investors’ expectations, STC would unilaterally cut orders of investors without announcing them.

Trading gold on accounts is a high-risk investment channel with investors invariably on the receiving end. After their closure in March, most gold exchanges became agents for international gold trading floors for which they still have to send foreign currencies abroad, another illegal activity. Trading gold on domestic or foreign accounts is illegal, so there is no way for victims to find justice.

By Le Mai Thi – Translated by Ngoc Tri

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