Investors affected by a botched tender offer yesterday protested outside the Financial Supervisory Commission (FSC), demanding that the regulator hold the depository bank involved accountable and investigate allegations of insider trading.
Video game developer XPEC Entertainment’s (樂陞科技) stock began tumbling sharply late last month as plans for Japan’s Bai Chi Gan Tou Digital Entertainment Co to acquire a 25.17 percent stake in the company collapsed.
The Japanese company had offered to spend NT$4.68 billion (US$147.62 million) to purchase 38 million common shares in XPEC at NT$128 per share, but it delayed payment and eventually axed the deal, citing wide swings in XPEC’s share price.
Photo: Chen Mei-ying, Taipei Times
Investors are facing massive losses as XPEC shares yesterday tumbled by the 10 percent daily limit for the third consecutive session to close at NT$56.9, compared with their NT$105 closing price on May 31 when the acquisition was announced.
Investors who participated in the public tender offer said they have lost about NT$180 million, while market rumors suggest that the company’s major stakeholders sold their holdings well in advance of the sharp tumble.
A total of 3,605 XPEC investors have organized a self-help association.
They urged the FSC to hold CTBC Bank Co (中國信託銀行) accountable for their losses, saying its failure to perform due diligence on Bai Chi Gan Tou compromised the integrity of the nation’s equity markets.
Protesters yesterday said that they had mistakenly trusted the judgement of the FSC, the Ministry of Economic Affairs’ Investment Commission and CTBC Bank, accusing them of failing in their duties to prevent questionable business practices.
They said that without the implicit approval of the regulators and CTBC Bank, they would not have believed that the Japanese company — which had a capitalization of only NT$50 million — would be able to come up with the nearly NT$5 billion required for the acquisition.
They also said that as retail investors they were not capable of performing a financial audit on the Japanese company, therefore CTBC Bank had to fulfill its share delivery obligations and seek reparations from Bai Chi Gan Tou.
Meeting with protesters, Securities and Futures Bureau Chief Secretary Tsai Li-ling (蔡麗玲) received their petition and promised to find out who should take responsibility for the losses caused by the failed deal.
Tsai said that the commission would host public hearings and seminars with industry representatives and academics to improve the oversight of public tender offers.
The Investment Commission said its approval criteria do not include financial aspects, and are limited to whether the transactions involve the transfer of vital technology that could compromise national security.
XPEC independent board members including former minister of economic affairs Yiin Chii-ming (尹啟銘), media personality Sisy Chen (陳文茜) and former Taipei Department of Cultural Affairs director Lee Yong-ping (李永萍) issued a statement yesterday following the criticism.
They did not have the authority to stop the deal, the statement said, adding that they made a neutral recommendation on it based on the findings of an accounting firm and the Investment Commission.
CTBC Bank said it would fully cooperate with authorities to resolve the issue, but added that it does not have the authority to demand a deposit on an acquisition, and it is not bound by law to fulfill delivery obligations and seek reparations for investors.
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