Thu, Mar 20, 2014 - Page 13 News List

Acer officials face insider trading probe

INSIDER KNOWLEDGE:Prosecutors said Acer officials were being investigated on charges of insider trading following losses and a change in management

Staff writer, with agencies

An official from PC maker Acer Inc (宏碁) was detained yesterday after he was questioned overnight by investigators on suspicion of insider trading.

The company’s shares closed down 1.92 percent, underperforming the broader market’s 0.49 percent decline.

The Acer official was identified as Henry Wang (汪島雄), the company’s acting spokesman, according to the New Taipei City District Prosecutors’ Office.

A stockbroker named Lo Fang-ju (羅芳汝), who is not employed by Acer, was also taken into custody after an initial investigation.

Prosecutors said Wang and Lo were detained to prevent any possibility of collusion with other suspects.

“The two were held on suspicions of insider trading, and if released, they might collude [on their statements] and destroy evidence,” New Taipei City District Prosecutors’ Office Chief Prosecutor Feng Cheng (馮成) said.

The other seven, including Acer human resources manager Chen Chiung-yuan (陳炯淵), were released on bail of between NT$50,000 and NT$400,000 (between US$1,640 and US$13,140), he said.

On Tuesday, prosecutors and investigators raided 14 different locations, including Acer’s headquarters in New Taipei City’s Sijhih District (汐止), following allegations that a stockbroker responsible for Acer’s stock investment acted on her client’s instructions to sell shares ahead of major announcements.

Chinese-language media said the alleged insider trading might have taken place on Nov. 5 last year after the company reported a worse-than-expected third-quarter loss of NT$13.1 billion last year.

The trading also happened shortly before then-chairman and chief executive officer Wang Jeng-tang (王振堂) announced his resignation that day.

Acer shares fell to a 12-year low on Nov. 6 last year.

The Financial Supervisory Commission referred stock trading irregularities before the company’s announcement to investigators, New Taipei City District Prosecutors’ Office spokesman Lee Hai-lung (李海龍) said.

Lee said these suspects made a profit of about NT$5 million using the information.

If the shares were traded with knowledge of the company’s losses and change in management, it would constitute a violation of the Securities and Exchange Act (證券交易法).

The company officials involved knew about Acer’s pending loss and sold personal shareholdings before it was made public, Lee said.

Authorities have not identified any fault on the part of Acer, he added.

If convicted, the suspects could be jailed for a maximum of 10 years and fined as much as NT$200 million, he said.

Acer shares ended at NT$17.85 yesterday, having dropped 2.46 percent since the beginning of the year and 33.64 percent over the past 12 months, according to data from the Taiwan Stock Exchange.

Once the world’s second-largest PC maker, Acer reported a record loss of NT$20.58 billion last year, the third consecutive unprofitable year following losses of NT$2.91 billion in 2012 and NT$6.6 billion in 2011.

The probe comes as Acer chairman Stan Shih (施振榮) and president and CEO Jason Chen (陳俊聖) implement a plan to rebuild the company into a hardware, software and services provider, while senior executives have taken voluntary salary cuts of 30 percent since January as the company struggles financially.

In an open letter made public yesterday, Shih apologized for disappointing shareholders and investors in light of the insider trading allegations.

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