Regulators to probe 170 firms' books

The nation's stock market regulators are scheduled to launch intensive probes into the semi-annual financial reports of nearly 170 listed companies next week, a move sparked by a string of scandals plaguing the local bourses.

The announcement yesterday sent the TAIEX down 72.66 points, or 1.23 percent, to close at 5,818.30 on a turnover of NT$74.79 billion.

Small companies thought to be likely candidates for the probe, such as Elitegroup Computer Systems Co (精英電腦) and VIA Technologies Inc (威盛電子), saw strong selling pressure on the Taiwan Stock Exchange (TSE). Elitegroup yesterday closed down 6.61 percent at NT$11.3 and VIA closed 4.27 percent lower at NT$19.7.

In the wake of a chain of scandals on the local bourses, the TSE has decided to enhance its substantial examination of semi-annual financial reports this year by increasing the selection ratio for probes to 10 percent from the original 5 percent of the publicly listed companies in a bid to include as many potentially problematic companies as possible.

As many as 68 companies out of the 676 listed on the TSE would be picked for the intensive probes starting next week, stock regulators said.

The GRETAI Stock Exchange would follow suit to pick a total of nearly 100 companies, including 10 percent of the 458 companies listed on the over-the-counter market, with the rest coming from the Emerging Stock Market.

Regulators downplayed the move yesterday, saying that they conduct probes on a routine basis.

"We have been doing these examinations for years and there is nothing special about the probes this time," the TSE's senior executive vice president Chiu Chin-ting (邱欽庭) said yesterday.

The TSE will start the process next week after finalizing the selection and submitting the list of companies to be probed to the Securities and Futures Bureau, Chiu said, adding that the companies' names would not be made public.

Chiu said that the one-off extension of the probe's scale to 10 percent was meant to detect problematic companies that have not yet surfaced, in a bid to pacify market speculations.

A GRETAI Stock Exchange official, who spoke on condition of anonymity, said that the bourse hoped to augment the early-warning effect through the enhanced examination procedure.

The selection would be based on significant and unusual performance reports, including serious losses and transactions among family members and people with other affiliations, the regulators said, adding that they would also examine accounts receivable and turnover rates.