Wed, Dec 14, 2011 - Page 12 News List

HTC takes Citibank analyst to court

RARE LAWSUIT:It is highly uncommon for companies listed in Taiwan to sue the analysts of international brokerage houses because of their respected status

By Jason Tan  /  Staff Reporter

HTC Corp (宏達電) has filed a criminal complaint against an employee at Citigroup Inc’s Taiwan unit for allegedly violating the Securities and Exchange Act (證券交易法), in its latest litigation case as the industry eagerly awaits the US verdict on its patent suit with Apple Inc tomorrow.

An HTC public relations official yesterday refused to comment on the Citigroup Global Markets Inc case, saying the issue has moved to legal proceedings.

“The case is more or less the same as what has been written in the papers,” said the official, who preferred not to be named.

According to the Chinese--language Commercial Times yesterday, HTC filed a lawsuit with the Taipei Prosecutors’ Office in August, claiming that a Citigroup analyst violated Article 155 of the Securities and Exchange Act, which bans traders from spreading rumors or untruthful information with the intention of manipulating stock prices.

The newspaper said it is rare for listed companies in Taiwan to sue analysts from international brokerage houses given their respected status in the field and the professional nature of their analyses of companies’ business performance.

However, because violation of the act is a public offense, -prosecutors will press ahead with the investigation even if HTC decides to withdraw the case.

The Taipei Prosecutors’ Office yesterday confirmed that HTC raised a legal complaint with Citigroup in August.

“The case is still in the prosecutor’s investigation stage,” Huang Mou-hsin (黃謀信), deputy chief prosecutor at the office, said by telephone.

Huang did not identify the Citigroup analyst.

HTC shares hit their highest level this year at NT$1,300 on April 29. The stock closed at NT$426 on the Taiwan Stock Exchange yesterday after advancing 2.65 percent.

On July 7, Citigroup downgraded HTC to “sell” from “buy,” citing corporate governance concerns over the company’s purchase of S3 Graphics Co, competition from Samsung Electronics Co and slowing demand.

On Sept. 29, Citigroup upgraded the stock to “hold,” but said investors should wait for a better entry point before buying HTC shares. On Oct. 7, Citigroup warned in a report of further margin decline at HTC in the third quarter after the company disclosed weaker-than-expected sales in September.

On Oct. 31, Citigroup cut its target price on HTC to NT$637 from NT$660, saying the company’s fourth-quarter guidance was below market expectations, and then on Nov. 24 the brokerage downgraded HTC to “sell” and again lowered its target price on the stock to NT$463, a day after the company’s revenue forecast revision for the fourth quarter.

On Nov. 23, HTC dropped its previous forecast for the fourth quarter, saying the new revenue guidance would be equal to the same period last year because of a poor macroenvironment, as well as competition from Apple and Samsung. That means HTC’s fourth-quarter revenue would be about NT$104 billion (US$3.43 billion), down by between 17 percent and 23 percent from the range of NT$125 billion to NT$135 billion that it forecast at an Oct. 31 investors’ conference.

HTC had said in a filing to the Taiwan Stock Exchange on June 29 that “it would not rule out the possibility of resorting to legal means to protect the company’s and shareholders’ rights if it found any third party intentionally spread rumors or inaccurate facts to manipulate its stock price.”

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