The Financial Supervisory Commission (FSC) yesterday said it will take legal action against Glaucus Research Group, accusing the US firm of disseminating false information about Asia Plastics Recycling Holding Ltd (APR, 亞塑再生) to manipulate the company’s share price in violation of securities transaction rules.
Glaucus is standing by its five months of research and has questioned the accuracy of Taiwan Stock Exchange Corp’s investigation, which took only two business days.
FSC Chairman William Tseng (曾銘宗) said the commission would turn the facts of the case over to judicial authorities in a bid to curb rogue securities transaction practices.
“We will not tolerate the dissemination of false information about firms listed here that could cause losses to other investors,” Tseng said after swearing in the new head of the commission’s banking bureau.
The Securities and Futures Investors Protection Center has been taking applications from investors seeking compensation from Glaucus over its financial reporting.
The center said it plans to file a suit at a US court in two weeks’ time.
APR shares closed up by the daily 7 percent limit yesterday at NT$72.8, outpacing the TAIEX’s 0.04 percent rise, but retaining a 16.32 percent decline over the past month due to the report by Glaucus accusing the China-based plastic foam maker of padding its earnings statements.
The alleged spread of fraudulent information took place in Taiwan, making the California-based company subject to local law, Tseng said, adding that the suit would target both Glaucus’ owner and the author of the report.
It is the first time the FSC has threatened a foreign research institute with legal action, which may lead to a class action suit.
The commission plans to strengthen its inspection of foreign-registered companies with a primary listing in Taiwan to make them more accountable, Tseng said.
The local bourse listings include 59 foreign-registered companies and more than 90 percent of them turned a profit last year, the commission said.
Foreign-registered companies are subject to stricter listing reviews and their accountants and underwriters remain responsible for their financial integrity two years after the firm’s initial public offering, the commission said.
Glaucus has issued an open letter to the market and maintained its “strong sell” rating on APR.
“We spent hundreds of hours over five months to compile our research on APR and question the preliminary investigation that reached a conclusion in two business days,” the letter said.
Glaucus, which will make money if APR’s stock falls, stood by its research and the right to discuss its investment opinions in a public forum, the letter said.
However, Glaucus said it is confident Taiwanese authorities will continue with a thorough inquiry.
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