Good news and bad. I know this problem well, and have ESRI admitting its a bug ( no bug number yet). They are working on fixing it. But at this time there is no way to correct the problem. The only way this will work is if you place esri toolbar on your application and use the pointer off there tool bar. You can not reference the pointer tool in code and move the vertext. I hate this solution too, hope they fix this soon.
PS. the toc control when dragging layers down in the toc control also move down 2 positions also a confirmed bug.