Veutron denies insider trading charges

Veutron Corp (力廣科技), a memory module and scanner maker under the Powerchip Group (力晶集團), yesterday denied allegations of insider trading following a raid by officials on its offices on Thursday afternoon.

Veutron chairman Frank Huang (黃崇仁) and several company executives are suspected of illegally selling their holdings in the company between 2001 and 2002 ahead of the disclosure of the company's massive losses totaling NT$3 billion (US$90.63 million), the Taiwan High Court Taichung Branch's Prosecutors' Office said.

Affected by the insider trading probe, Veutron's share price fell near its daily limit, or 6.89 percent, to NT$35.1 yesterday.

"The company, the board and their relatives did not sell off Veutron shares in April 2002," Veutron spokesman Eric Tan (譚仲民) said in a filing with the Taiwan Stock Exchange yesterday.

The company said it disclosed its financial figures and a capital reduction plan worth NT$3 billion -- almost equal to its accumulated losses -- on April 9, 2002, after obtaining approval from a board meeting held earlier that day.

In the filing, the company stressed that Powerchip group affiliates, including power supplier maker Lishin International Enterprise Corp (力信興業), also did not sell their Veutron holdings during the period.

The company also said that contrary to reports, the investigators did not summon Huang for questioning on Thursday.

Huang will fully cooperate with the authorities if requested, Tan said in the statement.

The probe into suspicious illegal trading is not expected to have any negative impact on the group's flagship company -- Powerchip Semiconductor Corp (力晶半導體) -- as the search is limited to Veutron, he added.

Huang also doubles as chairman of Powerchip Semiconductor, the nation's second-largest maker of computer memory chips.

The investigation is also not expected to impact on the operation of Taichung-based Rexchip Electronics Corp (瑞晶), a memory chip joint venture between Powerchip Semiconductor and Elpida Memory Inc, the statement said.

Chinese-language newspapers reported yesterday that investigators suspected Huang hid and put off the disclosure of Veutron's massive losses to facilitate the illegal sale of Veutron shares.

Former Veutron president Wang Chun-sheng (王俊升) and former vice president Wang Cheng-ming (王正明) were also being investigated, the reports added.

But the company said the two former executives, who were released after questioning on Thursday night, left Veutron in 1998 and 1999, respectively. In short, the Wangs had left the company prior to the alleged illegal stock trading in 2000 and 2001, Veutron said.

Later yesterday, prosecutors announced they had decided to bar three people from leaving the country as part of the insider trading investigation.

Those ordered to stay in the country are William Huang (黃俊欽), Lee Shou-zhu (李秀珠) and Chou Chin-ling (周錦伶), prosecutors said.

William Huang, a nephew of Frank Huang, works for Veutron affiliate Powerchip Semiconductor. Lee and Chou are accountants for Powerchip Group.

Additional reporting by Bloomberg