SBV warns against online money trading

Friday, May 9, 2008
The State Bank of Viet Nam has alerted people to the appearance of a lot of online money trading companies, and warned people about that kind of trading.

According to the State Bank of Viet Nam, in the last time, several companies, which only had the functions of giving consultancy and brokerage services, have set up websites to call for investment in gold and foreign currencies with the transactions carried out via the Internet.

Those who trade online have to pay $5,000 at least (equal to 5-10% of the transaction value), with payment in cash or by money transfer.

What attracts people to this sort of trading is the very high offered interest rates, 5-20% per month.

The State Bank of Viet Nam has stated that under the current laws, only institutions which are licenced by the State Bank are allowed to trade foreign currencies. Therefore, the said activities by the companies, including the brokerage and transaction services, are violations of the law.

In fact, online trading proves to be very risky, and the high offered interest rates prove to be utopian. No official investment channel can bring the interest rate of 20% nowadays. For securities investments, investors could only get 20% profit if share prices hit the ceiling prices for 10 consecutive trading sessions, something which is improbable now.

The State Bank has also warned that online trade organisers may try to swindle clients and disappear after they withdraw money from the accounts of the clients. “The biggest suffers in these cases are the clients,” the bank has warned.

The super-profit of 20% proves to be very attractive in the eyes of investors in the context of the falling stock prices, real estate prices and risky gold trading deals.

In fact, online trade companies once mushroomed in 2006-2007, and the names ‘Colony’ or ‘Golden Rock’ were well known at that time.

In 2006, the Chief Representative of Golden Rock Limited, a monetary online trading brokerage company, reportedly left Viet Nam with access to $10mil in investors’ money.

However, it seems that a lot of investors did not learn anything from the lesson.

The scenario repeated itself as $1mil of ‘investment capital’ disappeared with the director of Chien Thuat Service Consultancy Company. Chien Thuat was licenced in 2006, and had the chartered capital of VND5bil.

Not until April 2008, when the police examined the company, did the 150 investors of the company find out about the swindling. (Tien phong)