FSC to launch probe into alleged insider trading by Wu brothers

The nation's chief financial regulator yesterday told legislators a probe into alleged insider trading by siblings Thomas Wu (吳東亮) and Eric Wu (吳東昇) would be launched, with a report to be presented to the legislature within a month.

The two Wu brothers are fighting for control of Shinkong Synthetic Fibers Corp (新纖).

"We'll launch an investigation if there are any irregularities," Financial Supervisory Commission (FSC) Chairman Kong Jaw-sheng (龔照勝) told the legislature's finance committee.

Kong made the remarks after DPP Legislator Lin Wen-lang (林文郎) accused Thomas Wu of dumping over 90 million shares of Taishin Financial Holding Co (台新金控), owned by the fiber-maker, hours before the Ministry of Economic Affairs ruled last Wednesday that his younger brother Eric Wu should be the lawful chairman of Shinkong Synthetic Fibers.

Thomas Wu then bought back the shares through three subsidiary companies, a move which market insiders believe was aimed at preventing Eric Wu from buying more shares in Taishin Financial in the future, should the ministry's ruling designate him as chairman of Shinkong Synthetic Fibers.

The fiber-maker owned a 5 percent stake in Taishin Financial.

Thomas Wu is currently chairman of Taishin Financial, while his elder brother Eugene Wu (吳東進), who backed Eric Wu to head the fiber company, is chairman of another large bank -- Shin Kong Financial Holding Co (新光金控).

The DPP's Lin also accused Eric Wu, who is a Taiwan Solidarity Union legislator and chairman of Taiwan Securities Co (台證證券), of insider trading.

Taiwan Securities bought over 120 million shares of Shinkong Synthetic Fiber last Wednesday, when the ministry ruled that he was the fiber company's lawful chairman.

Boost performance?

It is speculated that Eric Wu bought the fiber company's shares to boost its stock performance and to celebrate the final ruling that he would take over the chairmanship from his elder brother.

Despite the family squabble, shares of Shinkong Synthetic Fibers have continued to climb, rising from NT$6 per share in early August, to NT$9.35 per share yesterday -- an increase of nearly 50 percent.

"As long as the firm's financial portfolio is healthy, the dispute over its leadership shouldn't have too much impact," according to one stock analyst, who refused to be identified.

"On the contrary, the fiber company's shares have performed pretty well, since there may be efforts to boost it," he added.

Although Thomas Wu vowed to dispute the ministry's decision last week, the fiber company's new board met yesterday and agreed that the firm will be temporarily headed by the Wus' mother, Wu Kuei-lan (吳桂蘭), who will be acting chairwoman.

Last week, the ministry ruled that the old board, which had elected Thomas Wu as chairman, should have been reshuffled.

As such, no chairman elected by the old board was legitimate since a letter of re-assignment had arrived before the board meeting on Aug. 6.