Suspected insider trading yesterday sent shares of Chou Chin Industrial Co (久津實業) -- maker of Bomy-brand (波蜜) vegetable and fruit juice -- down by nearly the daily limit of 7 percent, to close at NT$25 per share yesterday.
The downward pressure came after four securities houses failed to settle NT$2 billion worth of trades of the company's shares on Thursday.
The stock settlement default triggered a selling frenzy among investors yesterday. It was the largest such default since 1998.
The TAIEX lost 46 points or 1.1 percent to close at 4,350 yesterday.
Claiming to be financial viable, the company yesterday pointed the finger at vice president Wu Ming-hui (
Wu is reportedly in hiding after allegedly having embezzled NT$200 million from the company's account on Thursday.
"We suspect that Wu is behind the non-settlement incident -- an individual case of misconduct," said Orsen Hsu (許育人), special assistant to the company's chairman, Kuo Bao-fu (郭保富), at a press conference yesterday.
The company had nothing to do with the stock irregularities, Hsu said, adding that Wu had sent Kuo a tape and a fax yesterday morning, apologizing for his misconduct.
"I am deeply sorry for my greed which has caused great losses to the company and investors," the person identified as Wu said in the tape, which was played for reporters during the press conference.
Wu began working for Chou Chin in 2001.
Hsu said that "chairman Kuo is absolutely in the dark [about the settlement default] and will demand an explanation from Wu in the near future."
Although Kuo has claimed to have no knowledge of Wu's personal stock sales, he remains a board member of one of the two biggest investment firms which failed to pay up for NT$1 billion in the over NT$2 billion non-settlement deal.
Chinese-language media speculated that Kuo and the company's major shareholders joined forces to manipulate the stock market, boosting share prices from NT$18.4 in late January to a high of NT$30.9 on Thursday.
But Hsu rejected the manipulation accusation, adding that the company is operating normally.
Once the company's role in the dispute is cleared, its share prices should be able to bounce back, a market watcher said yesterday.
"If the company's fundamentals are OK, the dispute's damage to the company would only be a fluctuation in its stock price," said Dones Wang (
But even if the company is proved to have played no role in the irregularity, the alleged embezzlement by Wu still suggests that the company's internal financial management is problematic since a single employee was able withdraw two-thirds of the company's cash, Wang said.
"It still sends a negative message to the company's stock investors," he said.
Investors shunned some 130 million of the company's shares yesterday.
Among the four securities houses that failed to settle the NT$2 billion in deals, Reliance Securities Investment Trust Co (德信證券投信) yesterday paid in NT$660 million to the Taiwan Stock Exchange Corp (證交所) toward its NT$1.1 billion scheduled purchase.
The Securities and Futures Commission said yesterday the stock settlement default will be thoroughly investigated.
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