The State Securities Commission will increase surveillance of and penalties for illegal short selling after a recent rise in such activities led to the arrests of some local stockbrokers.

Brokerages are forbidden from providing short selling services to clients – the selling of a security that the seller does not yet own – but it is widely known that many companies have offered this service "behind the scenes".

Commission Chairman Vu Bang told local media that further violations will be fined severely and any securities companies violating the regulation will see their brokerage operations suspended for up to two months.

Individual brokers who committed these acts will have their professional certificates revoked, Bang said.

The arrest of the former head of the brokerage department at Vien Dong (Far East) Securities Co, Phan Thien Hau, along with the recent detection of short selling at HCM City Securities Co and Dai Nam Securities Co, have raised the alarm about an upswing in this phenomenon on the stock market.

The commission recently fined two HCM City Securities Co brokers an amount of 85 million VND (4,000 USD) each for lending securities to clients on the accounts of other clients.

The company itself was sanctioned 105 million VND (5,000 USD) for not effectively supervising the performance of its employees.

Current sanctions were not strong enough to deter violations, so the commission was amending the decree on sanctioning administrative violations on the securities market, including increasing penalties, Bang said.-VNA